Labour should ditch triple-lock pensions promise, says OECD

Labour should abandon its commitment to the pensions triple lock, the OECD has said, in the strongest intervention yet by an international organisation in the debate over the future of Britain's most expensive welfare commitment.

The triple lock, which guarantees that the state pension will rise each year by the highest of inflation, earnings growth or 2.5 percent, has been a cornerstone of pensioner policy since it was introduced by the coalition government in 2010. Labour has repeatedly pledged to maintain it, and the promise was a significant factor in the party's strong performance among older voters at the last election.

But the OECD's latest economic survey of the United Kingdom argues that the triple lock is "unsustainable" in its current form and that its cost — which the Office for Budget Responsibility estimates will add approximately £30 billion to annual pension spending by 2030 — is crowding out other forms of public spending, including investment in the services and infrastructure that younger generations will depend on.

The OECD proposes replacing the triple lock with a system that links pension increases to average earnings, with a floor to ensure that the real value of the pension does not fall. It argues that this would preserve the principle that pensioners should share in rising national prosperity while eliminating the ratchet effect that has caused pension spending to grow faster than the economy.

The government has rejected the recommendation, describing the triple lock as a "fundamental contract" with pensioners that it has no intention of breaking. But the political calculus may change as the cost of the commitment grows and as the pressure to address intergenerational fairness intensifies. The triple lock has survived every challenge so far. The question is whether it can survive the mathematics.