Prime Minister Andy Burnham has announced plans for an "adjusted triple lock" for the state pension, which will remove the annual link to average earnings rises. Under the new proposals, the state pension will increase by either the pace of price rises or 2.5%, whichever is higher, ensuring it keeps pace with inflation annually.
The government states that the policy would aim to maintain the state pension as a share of earnings at the record level it is due to reach in 2030. This change is described as sharper than expected, going beyond a review or consultation.
Government sources indicate that the decision to make this change now is projected to save approximately £15bn a year by 2040. The Institute for Fiscal Studies (IFS) suggests that if this adjustment had been in place since 2011, it would have more than halved the annual £16bn cost of the triple lock, resulting in a £9bn yearly saving.