The Triple Lock, introduced by the Conservative-Liberal Democrat coalition government in 2011, has been a key feature for 14 years, but its future is now in question. Kemi Badenoch hinted at potential changes this week, indicating that pensions might face more means testing.
She faced criticism on Thursday after suggesting she would consider means testing in relation to the Triple Lock’s future. The mechanism is designed to protect the State Pension from being eroded by inflation and other costs.
David Piltz, CEO at Gallagher’s Employee Benefits and HR Consulting Division in the UK, said: “The Triple Lock is fixed in place for now, but in the future, to maintain a high rate of increase, solutions like further boosting workplace pension savings through automatic enrolment or making tough fiscal decisions will be necessary.”
Come April, retirees will see their income boosted by over £470 due to the annual state pension rise of 4.1%, while other benefits will only get a modest 1.7% increase – almost a full 1% below the current inflation rate. The significant difference is due to the Triple Lock policy, which ensures State pension Payments increase by whichever is highest out of inflation, wage growth, or 2.5%.
Chancellor Rachel Reeves’ first budget introduced an adjustment to the State Pension rise in 2025 – which would be connected to a 4.1% wage increase across the UK. David continued: “The truth is that the Triple Lock cannot continue as it currently stands.”
Given the “double-bind” of the situation, one solution proposed was to make the Triple Lock means-tested, however it garnered little enthusiasm. The leader of the Tory party, Kemi Badenoch, expressed on LBC that her party would consider means testing benefits although did not specify which ones.
Many were concerned and responded negatively, suggesting she was going to means test State Pensions and the Triple Lock. However, she said: “Starting with the Triple Lock is not how to solve the problem.
“We need to start with why are we not making the same kind of money we used to make. We’ve started living off our inheritance, we’re living off the work that previous generations did.
“We’ve got to give something to the next generation. What are we leaving them with? That’s what we’ve got to sort out.”