Jeremy Hunt faces pressure to scrap state pension triple lock


Jeremy Hunt, the UK Chancellor, is being urged to overhaul the state pension triple lock system, which is currently worth £221.20 a week, in order to improve the country's finances. Forecasts suggest that a reform of the system would free up cash and help to pay off the country's significant debts. The Organisation for Economic Co-operation and Development (OECD) has warned that the UK will have the second-slowest growing economy among G7 nations by 2024. The OECD argues that reforming the triple lock would give the government more flexibility to deal with challenges such as high energy prices and the conflict in Ukraine.

Rising costs and slow growth

The triple lock system, introduced in 2010, guarantees that state pensions increase by either average earnings, inflation, or 2.5% each year. Last week, the Chancellor announced that pensions would rise by 8.5%, taking the weekly amount from £10,600 to £11,502. However, the Institute for Fiscal Studies estimates that the triple lock increases state pension spending by an astonishing £11 billion annually. The OECD has called for the system to be reformed, suggesting that pensions should be indexed to an average of Consumer Price Index (CPI) and wage inflation, and that direct transfers should be provided to pensioners at risk of poverty.

UK growth forecast

The OECD's Economic Outlook study predicts that UK growth will rise from 0.5% this year to 0.7% in 2024 and 1.2% in 2025. The study also suggests that the Bank of England will not lower interest rates until 2025, and that inflation will remain above the 2% target throughout next year.

Did you miss our previous article…