How to protect YOUR finances from the end of the triple lock

How to protect YOUR finances from the end of the triple lock By JEFF PRESTRIDGE, MONEY EDITOR AT LARGE Updated: The state pension triple lock is on death row. Prime Minister Andy Burnham confirmed the death sentence yesterday when he delivered his keynote speech – to a cacophony of sycophantic applause – at the Labour Party conference in Liverpool. Goodbye triple lock in 2030, hello less friendly double lock in 2030, and hello ‘free’ social care in England... at some point in the future. The death of the triple lock – which will be replaced by a double lock based on the higher of inflation or 2.5 per cent – will be a bitter blow for many of the country’s 13 million pensioners who depend upon the state pension for a majority of their household income and keep the pack of proverbial financial wolves (rising food prices and higher energy bills) from their doors. Earnings growth has been the driver of recent increases in the state pension – 4.8 per cent this year and a likely 3.9 per cent from April next year. Indeed, in six of the 15 increases determined by the triple lock since 2012, earnings growth has been used – with inflation used on five occasions and 2.5 per cent for the remaining four years. The death of the triple lock will be a bitter blow for many of the country's 13 million pensioners who depend upon the state pension Pensioners have already been emailing me as I’ve put these words down on paper in the wake of Burnham’s conference comments on the triple lock. ‘Betrayed’ is the most common word being used (other comments are unprintable). Yet the triple lock’s scrapping will not just impact on those currently in receipt of the state pension like me. Yes, for those of us in our late 60s and early 70s, it will represent a huge blow and make financial life tougher as the years go by. It will be financially disruptive at a time of life when you can do precious little to mitigate its negative impact. But for future generations – those in their 30s, 40s, 50s and early 60s – they will potentially be left much poorer in retirement as my colleague Rachel Rickard Straus explains over the page. The triple lock’s abolition subdues the amount at which the state pension grows every year, seriously eroding its value and spending power by the time many are eligible to receive it. Together with further increases in the state pension age likely in the coming years – it’s currently rising to 67 – the country’s pensioners of the future face retirement with a much-diminished state pension kicking in later than it does now. A horrible retirement double whammy. The message is a stark one. For those already at state pension age, it’s time to do an audit of your household finances to ensure you are getting value for money on everything you spend. Batten down the hatches – and claim all the benefits you are eligible for. For those yet to hit state pension age, start saving like crazy because you will no longer be able to depend on the state to fund more than a smidgeon of your retirement. Your income in retirement will depend primarily on your willingness to embrace financial prudence while you are still working. Since its unveiling in 2010 and introduction for the 2012 tax year, the triple lock has provided a financial comfort blanket for millions of pensioners The triple lock: In short Since its unveiling in 2010 and introduction for the 2012 tax year by the coalition government led by David Cameron, the triple lock has provided a financial comfort blanket for millions of pensioners. It has meant that the state pension has risen every April by at least 2.5 per cent or in line with the higher of prices or earnings growth. The only exception was in 2022 when it was suspended as a result of an overhang from the Covid pandemic. Back in April 2012 – before the introduction of the ‘new’ state pension – the full basic state pension was £107.45 a week. From April next year, the ‘new’ maximum state pension (for those who reached state pension age after April 2016) will rise to around £250.70 while those stuck on the old basic state pension as a result of reaching state pension age before April 2016 will receive a maximum of £192.10. Huge percentage increases since 2012 – 133 and 79 per cent respectively – although they mask the fact that only half of new state pension recipients receive the full amount while 75 per cent on the lower basic pension get the maximum payment. Next year’s 3.9 per cent increase in the state pension – to be confirmed in the Budget next month – has been triggered by the earnings element of the triple lock, based on average wage growth between May and July this year. This year’s 4.8 per cent increase was also based on earnings growth. If the double lock had been in place then, the hike would have been a more modest 3.8 per cent, based on inflation prevailing in September 2025. When compared to average earnings, the triple lock has given pensioners a ‘fairer’ state pensions deal, but only because the offering in 2012 was frankly appalling on all levels. Fourteen years ago, the full state pension represented around 17 per cent of average earnings although this figure varies slightly according to which definition of earnings that you use. Today, the equivalent figure for the new state pension is above 30 per cent. Yes, a better financial outcome for pensioners, as the Resolution Foundation and the Institute for Fiscal Studies keep reminding us. But still inferior to state pensions in most developed countries. Research last year by Fidelity International showed that the average level of state pension received by someone compared to their earnings while working was just 22 per cent in the UK. In France, Germany and Italy, the figures are 58, 44 and 76 per cent. In other words, UK pensioners still get a rum state pensions deal. But not in the eyes of Labour. So what's actually happening here? Burnham believes the triple lock has now done its job of improving the financial lot of many pensioners. As a result, it will be the sacrificial lamb to help fund his ambitious £18billion plan to reform social care so that everyone in England gets ‘free’ access to it. Not welfare spending. Burnham’s ripping up of the triple lock in 2030 is another betrayal of the elderly by Labour who, bizarrely, were targeted by Rachel Reeves when she became Chancellor in 2024. Her first action was to curtail the winter fuel payment to millions of pensioners; a decision which she subsequently had to do a massive U-turn on following a major public backlash. Left-wing think-tanks such as the Resolution Foundation have been itching for the lock’s removal. In recent weeks, they have been joined by the likes of Lord O’Neill, a former economic adviser to Burnham, who believes it is time for the Government to tackle ‘sacred cows’ such as the triple lock. O’Neill says the UK bond market, already spooked by geopolitical tensions in the Middle East and the country’s parlous financial position, would respond positively if Burnham were ‘to take credible action to deal with the excesses of the triple lock or the excesses of welfare spending’. Given that welfare spending cuts are way off Labour’s agenda, it is no surprise that the triple lock has been targeted. And how gleeful some Labour MPs are. Jess Phillips, MP for Birmingham Yardley, is ‘delighted’, while nearly a third of Labour members believe the state pension is the top priority for spending cuts. From April next year, the 'new' maximum state pension will rise to around £250.70 while those stuck on the old basic state pension will receive a maximum of £192.10 Triple lock abolition It is possible to do some back-of-the-envelope calculations on the impact of the triple lock’s death on pensioners, current and future. According to analysis by Sarah Coles, head of personal finance at investing platform AJ Bell, the average triple lock’s annual increase since 2012 has been 4.1 per cent. She has used this figure as the best guesstimate for the future average annual increase in the state pension if the triple lock had remained. She has then compared it with Burnham’s new double lock assuming an average annual increase of 4.1 per cent until 2030 and then 3 per cent per annum thereafter: the average inflation figure since the triple lock’s introduction. Under the double lock, people receive anything between £166,071 and £5,228 less in state pension depending on how old they are (respectively 50 and 75). We assume people live to 87. For 60- and 70-year-olds, they receive £67,514 and £16,417 less. The numbers confirm the damage Burnham’s double lock will do to pensioners’ incomes, although Coles is keen to stress that the figures are based on assumptions. She also says inflation will make the real values of these numbers far lower, so the impact on pensioner incomes is not ‘as significant as it looks on initial glance’. But the message is clear. Burnham will be putting less money into current and future pensioners’ pockets. I'm Simon Lambert, publisher of This Is Money, and you need to know that your pension, savings and property could soon be under attack. On October 28, Andy Burnham¿s government will set out its Budget. We don't know what they will do, but we do know about tax raids already on the way. The best thing you can do is get prepared. So I've called on some of Britain¿s leading financial experts to create my new six-week plan. I'll cut through the noise and take you step-by-step through everything you need to do to protect your money. Don¿t wait. Click here and sign up to Protect Your Money now. Action plan: Pensioners Any pensioners who believe their state pension may have been incorrectly calculated – for example, as a result of wrongly recorded national insurance (NI) contribution records –- should contact the Pension Service at the Department for Work & Pensions (0800 731 0469). If errors are confirmed, they will backdate any missing pension payments and upgrade your pension going forward. Do an audit of your household outgoings and see if you can trim them by shopping around. And check your eligibility to benefits such as pension credit and financial support if you require help with personal care. Don’t forget to use older person perks such as free bus travel. Your local Citizens Advice will help. ... and those still working Triple lock or no triple lock, the state pension will do no more than meet the cost of your household essentials in retirement. To ensure your later years can be enjoyed from a position of financial comfort and strength, you need to be accumulating retirement funds while you’re working. That means paying into a works-based pension if you’re employed – or a self-invested personal pension if you’re self-employed. Helen Morrissey, head of retirement at investing platform Hargreaves Lansdown, says: ‘The best action people can do to ensure they have enough money to fund their retirement is to start paying into a workplace or private pension as early as possible.’ The difference that early pension saving can make to someone’s future retirement wealth is phenomenal. For example, a basic-rate taxpayer initially investing £200 a month (£160 before tax relief of £40 is added) into a pension from age 32 would accumulate a pension fund worth £363,000 at age 68. This assumes contributions rising by 3 per cent a year and the pension fund enjoying annual investment returns of 5 per cent. But if they started at age 22, they would be able to build a pension fund by age 68 worth £700,000 – almost twice as much. Increasing your payments is also a good tactic, although most employer pensions will do this for you automatically – they take a contribution from your pay based on a percentage of your earnings, so as your pay increases, the pension contribution grows. Boosting your monthly pension payments can also help. For example, Standard Life says that a basic-rate taxpayer aged 50 who earns £42,000 a year and has £100,000 already saved in their pension pot will end up with a retirement fund at state pension age (67) of £221,000. This assumes combined pension contributions of 8 per cent a month from the employer and themselves, annual salary growth of 3.5 per cent and 5 per cent investment growth. But if they add an extra £80 to their pension fund every month (topped up to £100 with tax relief), they would amass a fund at state pension age of £242,000 – an extra £21,000. Don’t forget tax-friendly Isas either. And also check how you are doing with regards to your state pension and the entitlement you have built from making national insurance contributions. Use the state pension online forecast tool and ensure your NI details are correct – and consider making extra contributions to fill any gaps in your NI record so as to be eligible for a full new state pension. Pension calculator: When can you afford to retire? When can you afford to retire and how much do you need to get the lifestyle you want? This is Money's pension calculator, powered by Jarvis, uses benchmark Pensions UK Retirement Living Standards amounts to help you work out what your retirement could look like - and what you need to save.