What is the state pension triple-lock – and how could it be means-tested?
The pension triple-lock should be means tested to make sure the country is 'growing' Conservative leader Kemi Badenoch has said, sparking criticism from Labour opponents.
Speaking on LBC earlier this month, the leader of the opposition said the Conservatives are 'going to look at means testing' the measure used to increase the state pension year on year. It is currently in place for all pensioners, regardless of income or savings.
Speaking to host Iain Dale, Ms Badenoch said: 'Means-testing is something which we don't do properly here.'
'Starting with the triple-lock is not how to solve the problem. We need to start with: why are we not making the same kind of money we used to make?
'I tell people we've started living off our inheritance, we're living off the work that previous generations did. We've got to give something to the next generation. What are we leaving them with? That's what we've got to sort out.'
The Conservative leader has been asked by MPs to clarify what her comments would entail, but has so far not responded. They are a far cry from her predecessor Rishi Sunak's pre-election promise to introduce the ' triple lock plus,' which would have also seen the tax-free pension allowance increased every year.
What is means testing?
Means testing is when a person's finances are assessed to determine if they are eligible for a certain payment, or eligible for it at a different scale. It is based on the principle that those with less personal wealth should be more eligible to receive financial assistance than those with higher wealth.
Labour recently drew criticism for its mean testing of the winter fuel payment, which meant that only pensioners on the lowest incomes were eligible for the cold weather benefit.
Means testing the state pension triple-lock would likely mean reducing the annual rise for certain pensioners based on factors like their income, savings, and assets. This could either be done with a sharp cut-off, as with the changes to the winter fuel payment, or on a sliding scale.
What is the state pension triple lock?
The triple-lock guarantee, first implemented in 2011, means the state pension increases year-on-year by the highest of three measures. These are:
In 2024, the state pension increased by 8.5 per cent, in line with the previous September's inflation figure.
This April, it will go up by 4.1 per cent, matching wage growth in 2024.
The triple lock was introduced to ensure that the state pension would not be outstripped by rising prices, nor by the average spending power of those in work.
The measure has been criticised for potentially lacking long-term sustainability, costing the government more each year. In 2023/24, pension payments cost the government an estimated £124.3 billion.
What is the state pension age in the UK?
The current state pension age in the UK is 66. This is the age at which you can retire and start receiving your state pension. Before this, you can only withdraw from a personal pension, depending on your provider, and usually not before you reach 55.
The state pension age is set to rise from May 6, 2026, to 67. This transition will be gradual, with the state pension age being 66 and 1 month for someone born on April 6, 1960, 66 and 2 months for someone born on May 6, 1960, and so on.
It will then hit 67 for anyone born on or after March 6, 1961.
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