The government has stated that its adjustment to the state pension triple lock is expected to reduce the pensions bill by £15 billion over a decade. This figure is considered a reasonable central estimate by the Resolution Foundation.
According to the Office for Budget Responsibility, the original triple lock typically increased the State Pension by 0.53 percentage points more per year than if it were linked to average earnings. Over ten years, this would result in the State Pension being 5.43 per cent higher than an earnings-linked uprating. Applying this to a projected State Pension bill of £286 billion in 2039-40 under the triple lock suggests a saving of approximately £15 billion.
However, the actual savings are subject to economic volatility. The Resolution Foundation notes that the more volatile the economy, the more the original triple lock costs. Therefore, moving away from it aims to stabilise public finances, but the precise savings depend on future economic conditions.
The new 'adjusted' triple lock will ensure the pension rises by the higher of inflation or 2.5 per cent, with a safeguard that it will not fall below the value of earnings at its introduction, which is forecast to be 30 per cent.