The triple lock state pension rise is set to deliver a £490 increase next year, lifting the full new state pension to around £13,036, at a time when Chancellor John Healey is facing mounting pressure over the long-term cost of the uprating mechanism. Earnings data released on Tuesday showed wage growth, including bonuses, running at 3.9 per cent, the figure that will determine the triple lock increase.
Under the triple lock, the state pension rises each year by whichever is highest out of wage growth, inflation or 2.5 per cent. With inflation figures expected to come in at around 3.1 per cent, according to a poll of economists by Bloomberg, wage growth looks set to be the determining measure. According to calculations by Hargreaves Lansdown, that 3.9 per cent rise would take the full new state pension to about £13,036, just above the tax-free personal allowance of £12,570.
A benefit already half of total government spending on welfare
The scale of what is at stake in this annual calculation is considerable. The state pension now equates to £138bn, or around half the total amount the government spends on benefits, according to the BBC. Spending on pensioners is forecast to reach about £196bn by 2031, according to projections published in March.
The Labour government has pledged that those relying solely on the state pension will not be expected to pay income tax. However, pensioners drawing income from other sources could see more of their money brought into the tax net as the state pension edges above the personal allowance threshold.
Liam McLaughlin, associate economist at the National Institute of Economic and Social Research, said the rise would be ‘adding fiscal pressure at a time when the triple lock is already under scrutiny’. The mechanism has drawn wide criticism from economists across the political spectrum, with many arguing it is unsustainable for the public finances over the long run.
Triple lock state pension rise costs set to dwarf original forecasts
The Office for Budget Responsibility has said the triple lock state pension rise would cost nearly £16bn more per year by 2030 than if a standard earnings-linked uprating were maintained. A separate OBR figure, published by the BBC, put the annual additional cost at £15.5bn by 2030. Either measure represents nearly three times what the independent forecaster originally projected when the uprating mechanism was introduced.
Jonathan Cribb, deputy director of the Institute for Fiscal Studies, warned that the more ‘volatile’ inflation and average earnings growth were, the ‘higher the cost’ to the taxpayer. ‘Each increase in spending builds upon the last, and so the long-run cost is substantial but very uncertain,’ Cribb said. The IFS has warned that keeping the triple lock could cost the government up to £40bn more a year in today’s terms than if rises were linked solely to wage growth.
Against that backdrop, the government is also navigating a separate structural shift. The rise in the state pension age from 66 to 67 began in April 2026, a change that is expected to save the Treasury about £10bn a year by 2030, according to the BBC. That saving would offset only a portion of the additional triple lock expenditure the OBR has projected.
The tension between rising pension costs and constrained public finances has prompted a number of economists to call for the triple lock to be reformed. The Resolution Foundation has proposed replacing it with a ‘smoothed’ earnings link. Under the think tank’s model, the state pension would rise with inflation in years where price growth outpaces wages, protecting real value. When earnings subsequently rose back above inflation, the pension would not immediately follow, keeping it at a stable level relative to earnings over time.
The triple lock was the state pension rise mechanism the Labour government inherited and has chosen to maintain. With the Chancellor’s first budget approaching and pension spending already the largest single benefit line in government accounts, the 3.9 per cent figure released this week has done little to ease the arithmetic.
