What is the state pension triple lock?
Including what the “triple lock plus” proposals mean if the Conservatives win the upcoming election
Updated
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State pensioners received an inflation-busting 8.5% rise in April, taking the weekly new full state pension payment from £203.85 to £221.20. Here we explain why it rose by this figure and how the triple lock works.
The full basic state pension rises each year in line with the highest of three factors: earning growth figures between May to July the previous year, CPI inflation from the previous September, or 2.5%. This system is known as the triple lock.
Amid concern about the expense of the triple lock – the state pension increased 10.1% last April, costing the Treasury £124bn – the Conservative party has repeatedly promised that the commitment will stay, and now with a new election set for July 4, prime minster Rishi Sunak has confirmed it will be bolstered under a new “triple lock plus” system.
Labour’s shadow paymaster general, Jonathan Ashworth, labelled it as a “another desperate move” from the Conservatives but didn’t confirm what changes his party would make to the policy if elected.
This article outlines:
- NEW: What are the new triple lock plus proposals?
- What is the pension triple lock and how does it work?
- What does the triple lock on state pension mean for you?
- Will the triple lock be totally scrapped soon?
Read more: State pension: how much will I get?
NEW: What are the new Triple lock plus proposals?
Under the triple lock policy, the state pension will increase by earnings, inflation, or 2.5% – whatever is highest (more below).
But the proposed “triple lock plus” scheme would go one step further, increasing the personal allowance for pensioners by the same number.
Currently, the personal allowance stands at £12,570. It applies to all those earning £125,140 or less in the UK – regardless of your entitlement to the state pension.
In essence, your personal allowance is the first part of your income which you don’t pay tax.
So, for example, someone taking the full pension of £11,502 and £5,000 from their personal pot will have a yearly income of £16,502. Of this figure, only £4,000 will be liable for income tax.
However, under the “triple lock plus” system this personal allowance will rise by the highest of earnings, inflation, or 2.5%.
Paul Johnson, director at the Institute for Fiscal Studies, a research institute specialising in government spending, told BBC Radio 4 that the cost of the policy wasn’t significant. But, tabled with other proposals from the Conservatives, costs are beginning to add up.
What is the triple lock on pensions?
The coalition government announced the triple lock guarantee in 2010 and it was implemented from the 2011/12 financial year. The measure ensures the state pension rises each year in line with which measure is highest from the below:
- 2.5%
- Average wage growth between May and July (compared to the three months in the previous year)
- Inflation using the consumer prices index measure in the year to September (which was 10.1% in 2022 and 6.7% in 2023)
The triple lock has been applied every year since, except for a temporary suspension in 2022/23 for 12 months, with the earnings part of the triple lock was temporarily removed. There was speculation that the triple lock would be suspended for a second year.
Instead, the government confirmed that the triple lock guarantee would be reinstated in November 2022 prior to the start of the new tax year (2023/24). It came into effect from April 2023, with pensioners seeing their state pension income go up by 10.1%, in line with inflation from the previous September.
The triple lock applies to both the basic state pension (pre-April 2016) and the new state pension (post-April 2016) to ensure that they keep pace with living costs.
Find out more about the state pension increase 2023.
What is the full new state pension?
For the current tax year (2024/25) the full new state pension is:
- £221.20 a week (up from £203.85 a week in the previous tax year)
- £11,502.40 per year
You will only receive the full new state pension if you reached state pension age after April 2016 and have 35 full qualifying years on your national insurance record.
Read more: ‘Should I buy national insurance years to top-up my state pension?’
What is the full basic state pension?
The increase of 10.1% takes the basic state pension to:
- £169.50 a week (up from £156.20 a week in the previous tax year)
- £8,814 per year
People who receive the basic state pension (anyone who reached state pension age before April 6, 2016) can also claim an additional state pension, also known as the State Second Pension or SERPS.
There is no fixed amount for this – it is dependent on factors including your earnings and your national insurance contributions.
The triple lock does not apply to any additional state pension.
How much will the state pension rise by in 2024?
The CPI inflation figure used in the triple lock is released in October and was 6.7%, while the wage growth element came out in September and was 8.5%.
That means that the state pension will increase by 8.5% in April 2024, meaning:
- Full state pension – £11,502.40 per year
- Basic state pension – £8,814 per year
The personal allowance is currently £12,570 and will stay frozen at that rate until 2027/28.
If the state pension rises by just 3% on average, it will breach the personal allowance by April 2027, according to wealth manager Evelyn Partners.
- April 2024: 8.5% triple lock increase takes new flat rate state pension to £11,501
- April 2025: 3.0% increase = £11,846
- April 2026: 3.0% increase = £12,201
- April 2027: 3.0% increase = £12,567
Why was the triple lock guarantee suspended in 2022?
In 2021 there were concerns that earnings growth had been distorted by the fallout from the pandemic.
Millions of workers received a reduced wage through the furlough scheme, but as restrictions lifted, businesses brought staff back to work on full pay.
This caused an artificial boost in average wages, which increased by 8.8% between April and June 2021, according to the Office for National Statistics.
Due to the triple lock commitment, this would have meant that the state pension would rise by more than 8% in 2022. The government would have needed to find an extra £3 billion to fund this increase.
As a result, the government stepped in to suspend the triple lock guarantee for the 2022/23 tax year.
This means that in 2022 the state pension increased in line with the consumer price index, which was 3.1% in the year to September 2021. This is obviously higher than 2.5%, the other element of the triple lock.
Will the triple lock be scrapped?
For now, the triple lock is staying. The Conservatives have vowed to keep it if they remain in power while Labour have made no desire to scrap the policy.
The triple lock has long been criticised by some economists, who believe it is too expensive to maintain. Around 60% of the total UK spend on welfare payments goes to pensioners.
New analysis from The Times shows that by 2025 spending on the state pension will cost Britain more than education, policing and defence combined.
Meanwhile research from the the Institute for Fiscal Studies (IFS) shows that an additional £11 billion per year is being spent on state pensions as a result of the triple lock.
If the triple lock is kept in place, the state pension could potentially be worth between £10,900 to £13,400 per year by 2050 in today’s terms, according to estimates from the IFS – an additional £45 billion.
Arguments against the triple lock have also pointed to intergenerational unfairness.
Critics say it is unfair that younger people should subsidise the income of older people at a time when they may be struggling with their own living costs.
State pension triple lock: increases since 2011
| Financial year | State pension rise | Based on |
| 2011/12 | 4.6% | RPI |
| 2012/13 | 5.2% | CPI |
| 2013/14 | 2.5% | 2.5% |
| 2014/15 | 2.7% | CPI |
| 2015/16 | 2.5% | 2.5% |
| 2016/17 | 2.9% | Earnings |
| 2017/18 | 2.5% | 2.5% |
| 2018/19 | 3% | CPI |
| 2019/20 | 2.6% | Earnings |
| 2020/21 | 3.9% | Earnings |
| 2021/22 | 2.5% | 2.5% |
| 2022/23 | 3.1% | CPI |
| 2023/24 | 10.1% | CPI |
| 2024/25* | 8.5% | Earnings |
What would happen to my state pension without the triple lock?
Before the 2017 general election, the Conservatives proposed a “double lock” policy, which would determine state pension increases by the higher of earnings or inflation (scrapping the 2.5% measure).
However, this proposal was subsequently scrapped after the Conservatives signed a deal with the Democratic Unionist Party following the election.
Supporters of the triple lock say the policy helps ensure that people have enough to get by in retirement. It preserves the value of the state pension, reducing the amount of private savings needed to top up someone’s retirement income.
The triple lock may be even more important to future generations. Younger people are less likely to have the security of generous final-salary workplace pensions and will be more dependent on other sources of income (including the state pension).
They are also likely to retire at a later date than older generations, as the state pension age is rising to 68.
How else can I prepare my finances for retirement?
While the triple lock is a generous benefit, it is widely accepted that the state pension alone is not enough to fund a comfortable lifestyle in retirement.
Here are ways to boost your retirement savings:
1. Save through a pension
A pension is the best way to save for retirement, due to the generous tax relief on offer. For every £100 you pay in, the government tops this up by at least £20.
If you are employed, your employer will also pay into your pension on your behalf, giving your savings an extra boost.
You may have a:
- Defined-benefit pension: also known as final-salary schemes, these pensions are typically found in the public sector. You will get a set annual income in retirement. The amount will depend on how long you were with your employer, and your average salary during that time.
- Defined-contribution pension: these are commonly found in the private sector. You pay a portion of your salary into a pension set up by your employer. The money will be invested in the stock market. Your retirement income depends on how much you have saved into the pension and how your investments have performed.
You can also pay into a defined-contribution pension if you are self-employed. You might want to read: What is the best pension for self-employed workers?
Or you could contribute to a personal pension on top of any workplace scheme.
With personal pensions, you have a choice between:
- A ready-made plan, where the provider selects your investments. We list the top-rated ready-made pensions.
- Or a self-invested personal pension (SIPP), where you make your own decisions.
Here are eight simple ways to give your pension pot a boost.
We also help you understand how much you should pay into your pension.
2. Invest through an Isa
Isas can help you to grow your savings and boost your income in retirement.
One of the main types of Isa is a stocks and shares one.
While you won’t get tax relief on any money you pay in (unlike a pension), all returns and withdrawals through an Isa are tax-free. By contrast, you may have to pay income tax when withdrawing money from your pension.
If you want to retire early, an Isa can be a useful way of bridging the gap before you can access your pension. We explain how the Isa trick works.
There is also a Lifetime Isa, which combines the features of both a pension and an Isa.
If you are a subscriber of The Times, you can read their latest UK inflation Q&A here.
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