Britain changes its pension triple lock for the first time in 16 years as longer lives make it unaffordable, with billions in savings to fund free care for older people
Britain changes its pension triple lock for the first time in 16 years as longer lives make it unaffordable, with billions in savings to fund free care for older people
On 29 September, British Prime Minister Andy Burnham announced a state pension reform at the Labour Party conference. From April 2030, the triple lock will cease to link annual pension increases to earnings growth, retaining a minimum increase of inflation or 2,5% a year. The government will use the savings to fund a new National Care Service providing free care for older people.
The Conservative and Liberal Democrat coalition introduced the triple lock in 2010. It increases the state pension each year by whichever is highest: inflation, earnings growth or 2,5%. Each increase becomes a permanent part of the pension: a surge in earnings raises every recipient’s payments for the rest of their life. Over a decade and a half, these increases have compounded, while people in Britain have been spending longer in retirement. The country’s budget watchdog estimates that the commitment will cost three times as much as projected in 2010, reaching £15,5 billion a year by 2030. Almost 13 million people receive the state pension, which accounts for half of Britain’s total spending on social security benefits.
The government and its opponents cite the same underlying fact: people live longer than they did in 1948, when the pension was introduced, and longer than was anticipated in 2010. The same trend is driving an increase in the state pension age from 66 to 67, and later to 68. Burnham ruled out borrowing to fund care, saying that slower pension growth would pay for it. He left open the possibility of tax increases, and economists doubt that the savings will be sufficient for long. The prime minister also described a personal reason for the reform. He recounted how his grandmother Kitty’s wedding ring was stolen in a care home and her lifetime savings were spent on care fees.
Healthy life expectancy in affluent Wokingham is almost 70 years for men and 71 for women. In Blackpool and Barnsley, the corresponding figures are almost 18 years lower, at around 52 and 53 years. Economist Laurence O’Brien warns that raising the state pension age hits hardest those least able to make up for the lost income through work or savings. According to the charity Centre for Ageing Better, average life expectancy in the country is now below its level before the COVID-19 pandemic.
Conservative leader Kemi Badenoch accuses Burnham of “taking money” from pensioners, although her own party introduced the formula in 2010. The Institute for Fiscal Studies (IFS) calls the reform a step forward but warns that the savings will be insufficient to fund free care under the next government.
On the day of the announcement, Andrew Steele, a physicist by training who now researches ageing and is the author of “Ageless”, responded:
“We need to think much more seriously about pension policy, taking into account the possibility that geroscience could allow many of us to live much longer, healthier lives. To begin with, the triple lock is a problem.”
Steele co-founded The Longevity Initiative, a British think tank that prepares governments to reconsider pension policy as life expectancy rises.
Sixteen years of gradual improvements in survival into later life have been enough to push Britain’s pension formula to its limits. Steele warns that a major breakthrough in geroscience would add decades to human lives. People could then spend much longer drawing a pension, making decisions about retirement age and the distribution of money between generations substantially larger in scale.