The pension triple lock will add billions of pounds to public spending in the decades ahead, the UK’s official forecaster has said, after Andy Burnham suggested he would protect the measure.
The Office for Budget Responsibility (OBR) warned that debt levels could spiral to three times the size of the economy if not addressed by governments.
Under the triple lock, the UK’s state pension rises each year by whichever is highest out of inflation, wage growth or 2.5%.
Andy Burnham, who is seen as the frontrunner to replace Sir Keir Starmer as prime minister, has suggested he would stick to the 2024 Labour manifesto when asked whether he would move to scrap the pensions triple lock.
But the OBR warned in its latest annual fiscal risks and sustainability report that the policy measure would ramp up government spending in the decades ahead.
Under its baseline scenario, state pension spending is projected to rise from 5% of gross domestic product (GDP) to about 9% by 2075-2076, and is therefore a big driver of increased pressure on overall public spending.
This is partly driven by there being more older people in the population, while the triple lock is estimated to account for about a third of this rise, the OBR said.
Volatile inflation and earnings growth means the triple lock has been more costly than initially expected when the measure was introduced in 2012.
The OBR estimates that the triple lock will have added about £15.5 billion to state pension spending each year by 2029-2030 – up from the £5.2 billion a year that was originally costed.
“It is certainly a substantial pressure on public spending over the longer term and is making a very significant contribution to that upward pressure on spending,” said Tom Josephs of the OBR.
If the state pension rises with earnings rather than the triple lock then it would reduce pressure on spending by about 2% of GDP, the OBR estimated in its modelling for alternative options.
The OBR used its report to call on the UK to take early action to prevent debt from moving on to an “unsustainable and ever-rising path”.
Under its baseline scenario, rising borrowing each year results in UK debt levels soaring from about 95% of gross domestic product (GDP) in 2030-2031 to about 300% of GDP by 2075-2076.
