The Resolution Foundation has called on the Labour government to scrap the state pension triple lock, branding it unfair as spending on pensions is set to account for nearly half of the Department for Work and Pensions' (DWP) benefit expenditure by 2029-30. The think tank's 'What a racket' report proposes replacing the triple lock with a 'smoothed earnings link' to save billions.
What the Triple Lock Guarantees
Under the current system, the state pension rises by the highest of inflation, average wage growth, or 2.5%. The Resolution Foundation argues this is unsustainable, stating: 'At the current juncture, it is simply unfair to continue with a policy of the state pension rising by more than average earnings.' The Office for Budget Responsibility estimates that spending on the state pension would be £12.6 billion lower in 2029-30 with earnings-linked uprating compared to the triple lock.
Proposed Smoothed Earnings Link
The think tank proposes a 'smoothed earnings link' where the pension rises with prices when inflation exceeds earnings growth, protecting its real value. When earnings growth outpaces inflation, the pension would only rise with prices until it returns to its previous fraction of average earnings. Under current forecasts, this would leave the basic state pension at £199.65 per week in 2029-30, compared to £200.95 with the triple lock, saving around £650 million net.
Alternative: Smoothed Triple Lock
For those seeking less drastic change, the Resolution Foundation suggests a 'smoothed triple lock' that guarantees a 2.5% minimum rise but avoids the permanent ratchet effect. When earnings growth exceeds 2.5%, the increase would not be fully passed on, ensuring the pension tracks earnings in the long run. Figure 3 in the report shows that a smoothed earnings link since 2011 would have left the pension £12.30 per week higher in 2026-27, matching average earnings growth, but 11% (£28 per week) lower than the triple lock.
Impact on Public Finances
The net saving of around £9 billion by 2029-30 accounts for lower income tax receipts and higher means-tested benefit spending. The Resolution Foundation argues this reform is necessary to ensure fairness between pensioners and working-age people, as the triple lock has caused the pension to grow faster than earnings over the past decade.
