Triple lock review is ‘inevitable’ as new DWP figures released | Personal Finance | Finance

The triple lock will inevitably soon have to be reviewed, an expert has warned, despite new DWP figures indicating many pensioners face growing financial constraints.

The latest figures show that the average pensioner income was at £407 a week last year, increasing just £15 compared to 2010 despite the soaring living costs of the past few years.

Almost all pensioners were receiving the state pension in the financial year ending last year, with 13% of pensioners receiving their income solely through the state pension and benefits.

Digging into the figures, Thomas Lambert, financial planner at Quilter, said: “A far smaller percentage of pensioners received income related benefits in 2024, sitting at 20%, down from 31% in 2010 and 37% in 1995.

“This decrease highlights the impact of rising incomes from the state pension and private pensions, reducing eligibility for benefits. Unsurprisingly, single pensioners were much more reliant on this state support to bolster their pension income.”

He also warned that pensioners could soon find their yearly state pension increase is not as generous as the triple lock may soon have to change.

Mr Lambert said: “As the coming generations move into retirement and the age of defined benefit schemes comes to an end, it is likely to reveal a significant gap in retirement provision and pensioner incomes may decline as a result. We appear to be nearing a juncture where there will soon be an inevitable review of the triple lock.”

State pension payments will increase 4.1% this year, as the average earnings metric was used to determine this year’s increase in payments.

Last year, rates went up 8.5%, also in line with earnings, while the year before there was a record 10.1% boost to payments thanks to high levels of inflation.

Mr Lambert suggested an alternative to the triple lock metric: “One potential reform to the triple lock is to link increases to earnings, with a temporary CPI indexation when inflation exceeded wage growth but generally falling in line with long term wage increases, helping align pension growth with the wider economy and creating a more predictable and affordable system.

“However, any change must be handled carefully. The state pension is the single largest area of welfare spending and a vital source of income for millions.”

With the 4.1% increase to payments from next month, the full new state pension will rise from £221.20 a week to £230.25 a week, an increase of £470 a year.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, urged for clarity on the future of the state pension. She said: “The state pension was spared the benefits overhaul announced in the recent Spring Statement, but rumours continue to swirl around whether the triple lock will remain, and such uncertainty can undermine people’s confidence in the system.

“Putting the state pension on a firm long-term footing is vital to build this confidence and should be considered as the Government assesses adequacy issues during the second part of its Pension Review. Understanding what adequacy is, how it is to be achieved and the state pensions role as part of that will reduce speculation and help people to plan without fear.”

Another alternative to the triple lock is to switch to a means-tested system where the poorest get more support.

But this could be challenging to set up. Sarah Brown, chief actuary at Gallagher’s Benefits & HR Consulting Division UK, said: “The challenge is balancing fiscal responsibility while ensuring retirees have adequate incomes.

“Although means-testing could cut costs by providing support to those who need it most, this comes with complex administrative hurdles. While reform seems inevitable, the real question is how we can keep the policy affordable as the costs mount up.”