The policy, which guarantees annual increases based on whichever is highest among inflation, wage growth or 2.5 per cent, has become a central political issue because of rising costs and demographic pressures. Johnson argues that a different approach could provide a more predictable link between pensions and national earnings.
Economist Proposes a New Earnings-Based Approach
Speaking to The i Paper, Paul Johnson said politicians should recognise that the triple lock had become significantly more expensive than expected when it was introduced in 2011 by former Conservative chancellor George Osborne.
According to Johnson, unusual economic conditions over the past 15 years, including periods of higher inflation volatility, have contributed to the policy costing more than originally forecast. He said the mechanism represented a permanent upward pressure on pension spending and suggested that maintaining it indefinitely would create growing demands on public finances.
The economist, who led the Institute for Fiscal Studies between 2011 and 2025 and is now provost of Queen’s College at the University of Oxford, said the country should decide what level the state pension should represent as a share of average earnings.
He suggested that a figure of around one third of average earnings could provide a possible target. Under his proposal, the triple lock would remain in place until the pension reached that level, after which increases would be tied to maintaining the agreed proportion.
The current new state pension pays around £241.30 a week and represents about 30 per cent of median full-time earnings, which are around £39,039, according to figures cited in the report.
Rising Costs Drive Debate Over the Future of the Policy
The financial impact of the triple lock has become a concern for economists and policymakers. The Office for Budget Responsibility has forecast that the policy will cost £15.5bn a year by 2030, around three times the original estimate made when it was introduced.
According to the Office for Budget Responsibility, the combination of the triple lock and an ageing population could increase state pension spending from around 5 per cent of gross domestic product currently to 9 per cent by 2075.
Despite these concerns, major political parties have been reluctant to propose changes because pensioners are one of the groups most likely to vote. Labour has committed to keeping the triple lock during the current Parliament, following its 2025 general election pledge.
Johnson’s suggested alternative is known as a “smoothed earnings link”, a system already used in Australia. Under this model, pensions can temporarily rise with prices when inflation is higher than earnings growth. When earnings later grow faster than prices, pension increases would be adjusted until the pension returns to the agreed share of average earnings.
The Resolution Foundation has also supported a smoothed earnings link and has estimated that introducing such a system from next year would save around £650m in 2029-30, with savings continuing to grow over time. The debate around the triple lock now centres on how the UK balances pension security with the long-term cost of supporting an ageing population.
