A new proposal from a think tank suggests that the Department for Work and Pensions (DWP) could introduce a £30 weekly supplement for low-income state pensioners, funded by changes to the pension triple lock. The Intergenerational Foundation has recommended that the state pension should rise with inflation for the next four years, rather than following the current triple lock system, which could save £19 billion annually by the mid-2030s.
Triple Lock Reform Could Save Billions
The think tank argues that scrapping the triple lock would save £19 billion a year by 2035, equivalent to nearly £1,000 per working household. Further savings could reach £28.5 billion by 2040 and £38 billion by 2045. The triple lock guarantees annual increases in line with inflation, wage growth, or 2.5%, whichever is highest. The Intergenerational Foundation proposes that the state pension should increase only with inflation until 2030-31, then by the average of inflation and wage growth thereafter.
Supplement for Low-Income Pensioners
Part of the savings would be redirected to poorer pensioners through a new low-income pension supplement worth £30 per week (£1,560 per year). This supplement would be paid to those receiving Pension Credit, which tops up income to £238 per week for single pensioners or £363.25 for couples. The cost of this supplement is estimated at £1.9 billion by 2035, representing just 10% of the total savings from the reform.
Conor Nakkan from the Intergenerational Foundation stated: "The triple lock may have been introduced with good intentions but it has become an expensive and poorly targeted policy. It now delivers large increases to all pensioners, including millions who are already well-off, while younger generations face stagnant living standards, high housing costs and a growing tax burden."
Industry Reaction
Tom Selby from investment platform AJ Bell commented: "The random nature of how the increase is applied each year also leaves the Treasury exposed to wild fluctuations in the cost of state pension increases each year."
The proposal arrives amid ongoing debates about the sustainability of the triple lock and its impact on intergenerational fairness. The Labour government has been urged to consider these changes to balance the needs of pensioners with broader economic pressures.
