MPs are set to vote during the current Parliament on legislation changing the State Pension triple lock from April 2030, after the Government confirmed it will put the reform into law before the next general election.
Prime Minister Andy Burnham announced at Labour conference that the existing triple lock would remain unchanged throughout this Parliament, but would be adjusted from April 2030 to help fund a new National Care Service.
The Government has now explicitly confirmed: “The Government will legislate for the change during this Parliament.”
That means MPs will be asked to vote on the planned reform before it is due to take effect.
How will the triple lock change?
The existing triple lock guarantees that the basic and new State Pension rise each year by whichever is highest: average earnings growth, inflation, or 2.5%.
The Government says that system will continue unchanged throughout the current Parliament.
From April 2030, the State Pension would instead rise each year by at least inflation or 2.5%, whichever is higher.
A new earnings link would also be built into the system so that the pension maintains its value relative to average earnings over time. The Department for Work and Pensions says that if additional increases beyond inflation or 2.5% are required to maintain that relative value, the pension would rise by the higher amount.
Legislation to come before Parliament
The timing creates a significant political dividing line because MPs will have to take a formal position on the reform during this Parliament even though the adjusted system is not intended to begin until April 2030.
The eventual legislation will determine the precise statutory mechanism, and Parliament will have the opportunity to scrutinise and vote on the Government's proposals.
Government projects £15bn annual saving by late 2030s
The Government estimates that adjusting the triple lock could reduce State Pension spending by around £15 billion a year by the end of the 2030s, rising to around £50 billion a year by 2050 compared with retaining the existing triple lock.
Those figures are long-term projections rather than guaranteed savings. They depend on future movements in inflation, earnings, demographics and other economic assumptions.
Savings earmarked for National Care Service
Burnham says savings generated by the reform will be used to help build a new National Care Service in England during the next Parliament.
The Government's plan is for personal care to become free at the point of use based on need rather than ability to pay. The proposed service would cover personal care such as help with eating, bathing and using the toilet, but would not make residential accommodation and living costs universally free. Existing means-tested arrangements for bed and board would remain.
Baroness Louise Casey's independent commission is expected to make recommendations on how the National Care Service should be introduced and expanded.
Burnham says existing promise will be honoured
Burnham told Labour conference that the Government would honour its commitment to keep the current triple lock unchanged throughout this Parliament.
He said that from April 2030 the State Pension would continue to rise every year by at least prices or 2.5%, while retaining its value relative to earnings over time.
Critics of changing the triple lock argue that removing the current annual earnings test could leave future pension increases lower than under the existing system in some years. The precise financial effect will depend on future economic conditions.