Labour's triple lock pledge may soon be reversed as 'system is not sustainable'

Labour may soon have to change course on its commitment to the triple lock as the costs of the state pension continue to ramp up. Pensioners enjoyed a 4.1 percent boost to their payments in April thanks to the policy, that ensures the state pension goes up in line with the highest of 2.5 percent, the rise in average earnings or inflation. Labour has committed to keeping the policy for the rest of this Parliament, but some doubt they will stick to their promise.

Harry Fenner, entrepreneur and former CEO of Navana Property Group, said: "For years, the triple lock on pensions has been touted as sacrosanct, a promise no Government dares break. But with soaring inflation and a cost of living crisis strangling public finances, it’s clear the current system is no longer sustainable.

"The Labour Party’s stubborn pledge to maintain the triple lock throughout this Parliament is dangerously out of touch." He said that despite Labour assuring it will stick with the triple lock, ministers will "almost certainly be forced to reconsider".

Mr Fenner said that although the triple lock has been great for state pensioners, it could bankrupt the welfare state or force the Government to make "brutal cuts" in other areas to continue to foot the bill. Looking at alternatives to the triple, the entrepreneur suggested two options the Government could look at.

He said: "A fairer, more sustainable system must link pension rises to average earnings growth alone. This balances protecting pensioners’ living standards with fiscal responsibility.

"Alternatively, a triple lock modified to cap increases during economic downturns could work." The question of the affordability of the triple lock was put in the spotlight after OBR predictions suggest the cost of the state pension could rise to £15.5billion by the 2029-2030 tax year, three times previous projections.

Steven Cameron, pensions director at Aegon, said: "Figures such as those from the OBR make assumptions around the future and show that under the triple lock, the state pension could represent an increasingly high proportion of overall Government expenditure. This means any Government may have to decide whether to spend finite resources on triple lock increases or on something else."

Weighing up the factors that have to be thought through when changing the triple lock, Mr Cameron said: "The state pension is paid for out of tax and National Insurance (NI) receipts of working age individuals, so there’s a need to look at what’s intergenerationally fair and sustainable.

"Any decision to make changes in this Parliament or beyond will be highly political, but could become increasingly inevitable."

The full new state pension is currently worth £230.25 a week, and you typically need 35 years of NI contributions to get the full amount.