‘Triple lock’ – how what who why when?


‘Triple lock’. Triple-lock. Triple lock. “Triple lock?”.

It’s a term that most are uncertain of the exact phrasing, so it’s not surprising that many aren’t totally sure what it is. For some, it’s got something to do with the basic State Pension, and for others it’s the best way to secure your bike to a railing.

The ‘triple lock’ policy (which is how it will be written for our sanity and yours) has been a recurring point of discussion in the run up to the General Election. Opinions are split amongst the main parties regarding its future, but what is ‘triple lock’? and how does it affect your personal finances?

What is ‘triple lock’?

‘Triple lock’ was announced in June 2010 by the coalition government, as a way to guarantee that the basic State Pension will rise each year by whichever is the highest out of:

  • Average earnings
  • 5%
  • The rate of inflation as measured by the Consumer Price Index (CPI)

The intention of this policy was to ensure the financial stability of those on a fixed-income, as before ‘triple lock’ was introduced, the basic State Pension rose in line with inflation as measured by the Retail Prices Index (RPI). This was consistently lower than rises in annual earnings, meaning that each year, the buying power of pensioners was reduced.

What effect has it had on the State Pension?

Between April 2010 and April 2016, the ‘triple lock’ policy has increased the basic State Pension from £97.65 to £122.30. This boost in earnings over six years has seen the income of a pensioner rise at almost double the pace than that of the average worker as:

  • The State Pension rose by 22.2%
  • Average earnings rose by 7.6%
  • Inflation rose by 12.3%

Whilst ‘triple lock’ has allowed many pensioners to beat inflation, it hasn’t been cheap, according to the Government Actuary’s Department (GAD). The GAD calculates that ‘triple lock’ costs the Government around £6 billion per year, and could rise considerably in the next few years.

The future of the policy is currently in question, with the General Election causing the decision to be made much sooner than previously planned. Before the General Election was announced, the Government had committed to keeping the ‘triple lock’ policy in place until 2020, but what are the potential outcomes after the 8th of June?

The Conservatives policy on ‘triple lock’

The Conservatives state in their manifesto that their promise to keep ‘triple lock’ until 2020 will be maintained. After that, the policy will be adjusted to a ‘double lock’.

A ‘double lock’ policy would remove the 2.5% minimum annual rise, meaning that the basic State Pension would only rise by either annual earnings, or inflation as measured by the RPI. This would reduce the cost for the Government, but could leave pensioners worse off. Taking into account projections for the next five years, if the basic State Pension was increased solely on inflation, the average pensioner would be £817 worse off.

The Labour policy on ‘triple lock’

The Labour Party has pledged to keep ‘triple lock’ in place until 2025, should they gain power. Alex Cunningham, the shadow pensions minister, commented: “Labour is also committed to maintaining the triple lock through the next parliament to ensure dignity and security in retirement for future generations.”

This proposed extension could see the average pensioner £652.60 better off between 2021 and 2024, according to new research from the House of Commons Library.

Liberal Democrats

‘Triple lock’ started out as a Liberal Democrat policy that got implemented in the coalition government, and was designed as a short-term solution to bring many pensioners out of difficult financial circumstances.

In 2016, former Liberal Democrat leader Nick Clegg said that the ‘triple lock’ policy should be abandoned, questioning the sustainability of the automatic increases in an environment of low growth and low inflation. The Liberal Democrats have stated in their party manifesto that the ‘triple lock’ policy will be kept, but have not stated how long for.

With the Conservatives planning to change ‘triple lock’ in three years, Labour aiming to keep it until 2025 and the Liberal Democrats not revealing their intentions past 2020, the future of the policy is unclear. As former Prime Minister Harold Wilson once put it: “A week is a long time in politics”, which is particularly true in this case. Only time will tell whether the State Pension will be protected by a ‘triple lock’, a ‘double lock’ or any lock at all.