What is the pension triple lock and how is it changing?

For years, the state pension has had a pretty good deal: every April, it gets a raise based on whichever is highest: inflation, average earnings or 2.5%.

That’s the triple lock.

But from 2030, the rules are set to change. The government has announced plans for an adjusted triple lock, which would remove the automatic link to wage growth. The state pension would still rise each year by inflation or 2.5%, whichever is higher. If it starts falling behind average earnings, it would then be adjusted to catch up.

So, no, the state pension isn’t disappearing. But the way it grows is changing. And if retirement is somewhere on your horizon, it’s worth knowing what that could mean for you.

Why do we have a triple lock anyway?

Back in 1979, the basic state pension was £23.30 a week, and average earnings were £89.60. So the state pension was worth roughly 26% of average earnings. After the link between pensions and wages was removed in 1980, that gradually fell to around 16%.

The triple lock started in 2011 to reverse that slide, and it worked.

The full new State Pension is now worth around 30% of median full-time earnings.

The state pension is a safety net for millions of people, so if it loses value compared with the rest of the economy, pensioners can find themselves falling further behind.

The problem is that the triple lock can also push the state pension up faster than the rest of the economy.

Which brings us to the change…

So what’s actually changing?

At the moment, the state pension gets the biggest of three increases:

Inflation.

Average earnings.

2.5%.

From 2030, the earnings part becomes less automatic. Instead, the pension would rise by inflation or 2.5%, whichever is higher. If the state pension falls behind average earnings over time, it would be increased to catch up. That means the pension should still rise. But it may not grow as quickly as it would under the current system.

And that difference could become significant over decades.

Why does the government want to change it?

There’s a slightly odd thing that can happen with the triple lock. Imagine inflation shoots up. The state pension gets a big increase. Then, the following year, wages rise sharply as people catch up with higher living costs. The state pension can get another big increase, so you can end up with two large rises in a row.

Economists call this the ratchet effect.

The Institute for Fiscal Studies estimates that the state pension will cost around £154 billion in 2026/27, making it the UK’s most expensive benefit.

The government says changing the triple lock could raise an additional £15 billion a year by 2040 compared with keeping the current system.

That money is being linked to plans for a National Care Service.

Responding to the announcement, the IFS said: “The removal of this permanent ratchet is to be welcomed and marks a substantial step towards a more sustainable and predictable state pension system.”

Whether the policy ultimately looks like this depends on what happens between now and 2030. But the direction of travel is clear: the state pension is unlikely to keep getting the same automatic boost from wage growth forever.

Does this mean your state pension will be worth less?

It could be worth less than it would have been under the current triple lock, but there’s an important distinction here:

The proposal isn’t to stop the state pension increasing.

It would still rise every year. And there would still be protection against it falling behind earnings indefinitely. The question, really, is how quickly it grows, and when you’re thinking about a retirement that could last 20, 30 or even 40 years, small differences in growth can add up.

Which brings us to your pension

The state pension is one piece of your retirement income. Your workplace or personal pension is another, and unlike government policy, your own pension is something you can actually do something about.

If you’re in the public sector...

If you’re part of the Local Government Pension Scheme (LGPS), you have a defined benefit pension.

That means your retirement income is based on a formula linked to things like your salary and how long you’ve been in the scheme. You’re not responsible for building an investment pot and then figuring out how much you can safely take from it.

Your pension is doing some of that heavy lifting for you.

But there are still things you can control.

Your LGPS retirement to-do list

1. Check your pension statement
Know what you’re currently building up and what your projected retirement income looks like.

2. Think about whether you want to put more away
LGPS members can use options such as Shared Cost AVCs to build additional retirement savings. With My Money Matters’ Shared Cost AVCs, for example, £100 of your salary can become £138.75 in your retirement fund if you’re a basic rate taxpayer, thanks to tax and National Insurance savings.

3. Think about the retirement you actually want
Your pension statement gives you a number, but your retirement plans give that number some context. Will it cover the life you want, or are there things you’ll need to build in separately?

If you’re in the private sector...

Most workplace pensions in the private sector are defined contribution pensions.

Here, you and your employer pay into a pension pot, which is invested over time. What you eventually get depends on how much goes in, how the investments perform and how you choose to take your money when you retire, so your contributions matter.

If you’re paying in the minimum, increasing them even a little could give your future self a bigger pot to work with. And if you’ve changed jobs a few times, it’s also worth checking where your old workplace pensions are hiding. They have a habit of accumulating in the financial equivalent of the kitchen drawer.

You might have more retirement savings than you realise.

How much will you actually need to retire?

All this talk of pension rules and contribution rates can make retirement feel like a very long spreadsheet, but there’s a much more useful question to ask:

What do you actually want your retirement to look like?

The Pensions UK Retirement Living Standards give us a useful benchmark. They estimate the annual income a single person or couple would need for three different standards of living, not including bills, mortgage or rent.

                                  Source: Pensions UK Retirement Living Standards report, 2026/27

These aren’t targets everyone needs to hit. Your version of a comfortable retirement might involve three holidays a year. Or a very good garden and absolutely no airports.

The point is that your retirement income needs to match the life you want to live, and this is where your state and workplace pensions come together.

Your state pension could provide part of your income. Your workplace pension could provide another part. Savings and other income might make up the rest.

So instead of asking: Is my pension big enough?
Try asking: What will I want my money to pay for?

Then you can work backwards. Check what your pensions are currently on track to provide. Compare that with the kind of retirement you want. If there’s a gap, you’ve found something you can actually do something about.

And the earlier you spot that gap, the more options you have for closing it.

Either way, don’t leave your retirement to chance

The rules around the state pension can change. Your own pension gives you another source of income to build alongside it.

You don’t need to predict what governments, markets or the economy will do over the next 30 years, you just need to know what you have, what you’re putting in and whether it’s heading in roughly the right direction.

Because the more of your retirement income you build yourself, the less you’re relying on what happens to the state pension between now and then.