Understanding the State Pension Triple Lock: What Could It Mean for You?
Published: 15 October
The state pension is set to rise by £460 per year from April 2025, following a 4% increase in average wages. This increase follows the “triple lock” policy, which adjusts the state pension each April based on the highest of these three factors: 2.5%, inflation, or earnings growth.
What is the Triple Lock?
The triple lock is a policy that ensures the state pension maintains its value against the cost of living and wage growth. Each year, the increase is tied to the highest of:
The previous September's inflation rate,
Average earnings growth from May to June, or
A minimum of 2.5%.
This mechanism, introduced in 2010, was designed to protect pensioners from rising costs and ensure their income remains in line with the economy.
Expected Pension Rates
For those receiving the new full state pension (post-April 2016 retirees), the weekly rate is anticipated to reach £230.30 by April 2025. Those on the old basic state pension (pre-April 2016 retirees) could see their payments rise to £176.45 per week.
In April 2024, the triple lock resulted in an 8.5% increase, setting the weekly rates at £221.20 for the new pension and £169.50 for the old pension.
The Future of the Triple Lock
While the Labour government has pledged to maintain the triple lock through the current parliamentary term, there are questions about its long-term affordability. The policy has ensured pensioners keep up with or outpace wage growth, but this could face scrutiny given rising costs.
State Pension Age Changes
Currently, the state pension age is 66 for individuals born between 6 October 1954 and 5 April 1960. For those born after this, the age is set to gradually rise to 67, and eventually to 68 for those born on or after 5 April 1977. While there was speculation of advancing these increases to the late 2030s, current plans remain unchanged.
Additional Support: Pension Credit and Winter Fuel Payment
Individuals above the state pension age may be eligible for Pension Credit, which supplements weekly income up to £218.15 for singles or £332.95 for couples. This benefit can also grant access to housing benefits and council tax reductions.
As of autumn 2024, the Winter Fuel Payment will be restricted to those on Pension Credit or similar means-tested benefits. Previously available to anyone over a certain age, this change affects up to 10 million individuals.