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UK State Pension Triple Lock: What ‘Keeping Pace With Earnings’ Means · Stories Today

• 0:00
  Speaker 1: From April 2030, the state pension will rise each year
• 0:04
  Speaker 1: by CPI inflation or 2.5%, whichever is higher. The automatic
• 0:11
  Speaker 1: annual link to average earnings is dropped. A new safeguard
• 0:16
  Speaker 1: keeps the pension in step with earnings over time, and
• 0:20
  Speaker 1: the savings will pay for a national care service. The
• 0:23
  Speaker 1: Andy Burnham state pension triple lock shake-up is the biggest
• 0:28
  Speaker 1: change to pension uprating in 15 years. He confirmed it
• 0:32
  Speaker 1: in his first Labour conference speech in Liverpool. The current
• 0:36
  Speaker 1: formula stays for the rest of this Parliament, adding over £ 2, 000
• 0:41
  Speaker 1: to the state pension. Key takeaways. The existing triple lock
• 0:48
  Speaker 1: runs until April 2030. From then on, the adjusted triple
• 0:53
  Speaker 1: lock pays the higher of CPI inflation or 2.5%. A
• 0:59
  Speaker 1: new earnings link stops the pension drifting behind wages over time.
• 1:04
  Speaker 1: The Treasury says the pension will not fall below a
• 1:08
  Speaker 1: share of average earnings threshold, reported as 30%. Ministers expect
• 1:15
  Speaker 1: savings of £ 15 billion a year by the end of
• 1:18
  Speaker 1: the 2030s, rising to £ 50 billion by 2050. Nobody's pension
• 1:25
  Speaker 1: will ever go down. The law passes this Parliament, but
• 1:29
  Speaker 1: the change only lands if Labour wins the next election.
• 1:34
  Speaker 1: How the triple lock works today. The state pension rises.
• 1:39
  Speaker 1: Every April by the highest of three figures. Total earnings
• 1:43
  Speaker 1: growth in the May to July period of the previous year.
• 1:47
  Speaker 1: CPI inflation in September before, or 2.5%. The coalition introduced
• 1:54
  Speaker 1: it in 2010. And it was first applied in 2011.
• 1:59
  Speaker 1: The aim, as the BBC notes, was simple. Pensioner incomes
• 2:04
  Speaker 1: should not be overtaken by the cost of living or
• 2:08
  Speaker 1: the pay of working people. In 1979 the state pension
• 2:11
  Speaker 1: was worth 26% of average earnings. The wage link was
• 2:18
  Speaker 1: cut in 1980, and the value slid to 16%. The
• 2:24
  Speaker 1: Pensions Commission puts the full new state pension at roughly
• 2:28
  Speaker 1: 30% of median full-time pay. Today, state pension triple lock.
• 2:34
  Speaker 1: What changes from 2030? From April 2030, the guarantee becomes
• 2:40
  Speaker 1: a rise of at least prices or 2.5% each year.
• 2:45
  Speaker 1: Earnings drop out of the annual calculation. In its place
• 2:50
  Speaker 1: sits a catch-up test. If the pension falls behind wage
• 2:54
  Speaker 1: growth since the policy started, it is lifted to keep pace.
• 2:59
  Speaker 1: Burnham told delegates, the state pension will continue to rise
• 3:03
  Speaker 1: every year, at least by prices or 2.5%, and it
• 3:08
  Speaker 1: will hold its value relative to earnings over time so
• 3:12
  Speaker 1: that Pensioners will always share in the rising prosperity of
• 3:16
  Speaker 1: the nation. Independent briefing is explicit. If inflation spikes, pensioners
• 3:23
  Speaker 1: are protected, and if wages climb, they share in it.
• 3:28
  Speaker 1: Should the pension sit at around a third of average
• 3:30
  Speaker 1: earnings in 2030-31, it will rise as earnings. Rise. Why
• 3:37
  Speaker 1: the ratchet is being removed. The Resolution Foundation calls the
• 3:42
  Speaker 1: current floor or ratchet. High inflation pushes the pension up
• 3:47
  Speaker 1: sharply one year. Wages catch up the next year and
• 3:51
  Speaker 1: push it up again. Over time, the pension runs ahead
• 3:55
  Speaker 1: of earnings. The Institute for Fiscal Studies explains the new
• 4:00
  Speaker 1: sum as the highest of CPI, 2.5%, or whatever is
• 4:05
  Speaker 1: needed to match earnings growth. Since the reform begins its verdict,
• 4:11
  Speaker 1: the removal of this permanent ratchet is to be welcomed
• 4:15
  Speaker 1: and marks a substantial step towards a more sustainable and
• 4:19
  Speaker 1: predictable state pension system. The Office for Budget Responsibility had
• 4:25
  Speaker 1: already flagged the cost under the old lock. State pension
• 4:29
  Speaker 1: spending was heading for about 9% of GDP by 2075-76,
• 4:31
  Speaker 1: up from 5% now. The money, big. Savings, but slowly.
• 4:33
  Speaker 1: The state pension will cost about £ 154bn in 2026-27, making
• 4:35
  Speaker 1: it the UK's most expensive benefit. The triple lock has
• 4:55
  Speaker 1: added roughly £ 16 billion a year compared with simple earnings.
• 5:00
  Speaker 1: Uprating since 2010. Pension rates have climbed 89% since 2011,
• 5:07
  Speaker 1: against 66% for earnings. Officials and money control expect the
• 5:13
  Speaker 1: reform to cut spending by £ 15 billion a year by
• 5:15
  Speaker 1: the end of the 2030s and £ 50 billion a year
• 5:21
  Speaker 1: by 2050. IFS Deputy Director Jonathan Cribb is cautious about
• 5:28
  Speaker 1: the early years and warns, we should not expect this
• 5:31
  Speaker 1: reform to save enough that it could fund universal social
• 5:35
  Speaker 1: care in the next Parliament. Its modelling also ran the
• 5:39
  Speaker 1: numbers backwards. Had the new lock applied since 2011, spending
• 5:45
  Speaker 1: this year would be £ 9 billion lower, yet the pension
• 5:49
  Speaker 1: would still have grown 6% in real terms. What it
• 5:54
  Speaker 1: means for pensioners. The pension keeps rising in real terms,
• 5:59
  Speaker 1: just more slowly. Quilter's research shows why the detail counts.
• 6:04
  Speaker 1: The state pension makes up 24% of retirement income across
• 6:10
  Speaker 1: all retirees, 57% for those aged 65 to 79 on £ 25, 000
• 6:12
  Speaker 1: or less, and 54% for over-80s on below-average incomes. Onus
• 6:14
  Speaker 1: figures put total wage growth at 3.9% in the quarter
• 6:16
  Speaker 1: to July, which could push the full new state pension
• 6:19
  Speaker 1: above £ 13, 000 next year. The personal Allowance has been frozen
• 6:39
  Speaker 1: at £ 12, 570 since 2021. AJ Bell's Rachel Vahe is blunt. Scrapping.
• 6:48
  Speaker 1: The triple lock cannot solve the national care problem on
• 6:51
  Speaker 1: its own. Pension bees make curry. Frames the swap. This
• 6:56
  Speaker 1: is ultimately a trade-off. Pensioners giving up the protection of
• 7:01
  Speaker 1: the Earnings element of the triple lock in return for
• 7:04
  Speaker 1: greater protection from potentially catastrophic care costs. The care service
• 7:10
  Speaker 1: it funds. The National Care Service will offer free personal care.
• 7:16
  Speaker 1: In England based on need, not ability to pay, covering
• 7:20
  Speaker 1: help with eating, bathing and using the toilet. It arrives
• 7:25
  Speaker 1: in phases in the next Parliament, fully funded and not
• 7:28
  Speaker 1: through borrowing. Bed and board stays are means tested, and
• 7:33
  Speaker 1: deferred payment agreements remain. Around three in four adults over
• 7:39
  Speaker 1: 65 will need care, and one in seven face costs
• 7:43
  Speaker 1: above £ 100, 000. Baroness Casey's. Commission reports in summer 2027. The
• 7:51
  Speaker 1: political row. Unites Sharon Graham wanted a wealth tax. Instead.
• 7:57
  Speaker 1: Kemi Bardinok says the savings will not fund a nationalised
• 8:01
  Speaker 1: care system for another two. Decades. Nigel Farage accused the
• 8:06
  Speaker 1: PM of, launching an offensive against our elderly, while Sir.
• 8:11
  Speaker 1: Ed Davey said it. can't be funded from the pockets
• 8:15
  Speaker 1: of our poorest pensioners. The Guardian points out that the
• 8:19
  Speaker 1: sums arrive late and the borrowing backdrop remains tight. Age
• 8:24
  Speaker 1: UK's Caroline Abrahams welcomed the care pledge but reserved judgment
• 8:29
  Speaker 1: on the detail. Egan's Kate Smith summed the mood up.
• 8:34
  Speaker 1: We await the detail.