State pension triple lock warning as pensioners told 'it can't go on forever'

Labour has been urged to overhaul the current pensions system as it's warned the triple lock "can't go on forever". Paul Johnson, former director of the Institute for Fiscal Studies (IFS), called on the Government to address the scheme that's projected to cost £15.5 billion a year by 2030. He said: "Many people don't think the state pension itself will last much longer. When polled, a third claim not to believe it will exist in 30 years' time. ... People are not completely stupid."

He wrote in The Times: "The triple lock clearly can't go on forever." Mr Johnson called for a shake-up as part of the Department for Work and Pensions' (DWP) review of the retirement age framework. The triple lock was also pinpointed by the Office for Budget Responsibility (OBR) as a major strain on public finances, potentially costing 7.5% of the UK's entire GDP within the next 50 years.

Under the scheme, the state pension increases annually by either the rate of inflation, average wage growth or 2.5% - whichever is highest.

The IFS previously called for Labour to scrap the triple lock and promise never to mean-test pension payments to generate an extra £11 billion a year.

It said the move would make future pensioners more financially secure and address issues with the current system.

Its Pension Review, in conjunction with the Financial Fairness Trust, included reforms to help vulnerable groups and enhance private savings schemes.

It also included a guaranteed state pension framework and provided practical solutions for people to manage their pensions during retirement.

While the state pension is not currently means-tested, the IFS called for support to be improved for those approaching retirement age. It called for ministers to establish a specific benchmark for a new state pension, relative to typical wages.

Annual increases would then match average wage growth as opposed to the triple lock scheme.

Pension payments would never fall below inflation, as temporary adjustments would be allowed when prices rise faster than earnings. The state pension age would also only increase if life expectancy improves.

Under the proposed scheme, every employee between 16 and 74 would get mandatory contributions from their employer, valued at 3% of their salary, regardless of whether they contribute themselves.

The IFS said this would increase default contribution rates under automatic enrolment and protect the take-home pay for people earning less. Self-employed people would make pension contributions via their tax self-assessment.