State Pension could reach £33,000 a year, and reduce government spending by 4.6%, by 2050 under adjusted triple lock model

The proposed changes to triple lock could enable the state pension to reach £33,000 by 2050, while still reducing government spending by 4.6% within 25 years, according to analysis from Hymans Robertson. The leading pensions and financial services consultancy has launched a State Pension Explorer tool that shows that the adjusted lock, due to come into force in April 2030, will be able to protect future generations of pensioners while providing a sustainable approach to balance the needs of taxpayers and the economy. The firm has launched the tool to calculate the differences between the existing and proposed state pension dependent on economic conditions and future volatility.  It shows financial savings for the government to be substantial, with the triple lock redesign reducing the spend on state pension.

Commenting on the findings from the State Pension Explorer tool, Calum Cooper, Head of Pension Policy Innovation, Hymans Robertson says:

“The impact of the triple lock changes announced by the government show a clear commitment to transform the current pension system in a sustained planned manner to benefit both pensioners and protect the economy. The findings from our modeller clearly align with this vision. The results suggest the so-called adjusted lock will maintain the current earnings link which underpins the notion of adequacy, but will also reduce long-term pressure on the government and taxpayers, while at the same time benefiting pensioners; no small feat. We believe that the redesign of the State Pension could reduce the cost to the government by as much as 4.6% by 2050, a significant saving on spending.

“From our modeller, and using the new triple lock calculations we calculate this to provide (subject to economic conditions not withstanding) a £33,000 State Pension by 2050. This figure will go some way to protect future pensioners from inflation, provide confidence in the long-term durability of the state pension, but will also reduce costs for the government and the economy as a whole. The results show why this is not a simple savings story. In a low-growth economy, the fiscal saving can fall by almost half. The reform can support a more sustainable settlement, but outcomes will remain sensitive to inflation, earnings and economic volatility. Our explorer helps people examine those trade-offs rather than rely on a single forecast.”

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