Prime Minister Andy Burnham has announced plans to 'abolish' the state pension triple lock by 2030. The proposed changes would introduce a new indexation method for pensions, linked to inflation or 2.5 per cent, whichever is higher, with an additional adjustment to maintain a link to average wage levels over the medium term.
For example, if inflation is three per cent and wage growth is four per cent in the first period, the pension would initially rise by three per cent. If inflation then falls to two per cent while wage growth remains at four per cent in the second period, the pension would rise by five per cent to keep pace with the cumulative eight per cent rise in wages over the full period.
This announcement was made alongside plans for a national social care service. William Nixon, a senior research fellow at Policy Exchange, suggests that the proposed changes to the triple lock are unlikely to save enough money to cover the significant new spending on social care.