Burnham sets out plan to reform triple lock to pay for social care

Andrew Prosser, head of investments at InvestEngine, said: “The Prime Minister’s proposal to keep the triple lock throughout this Parliament, but adjust it from April 2030 to help fund a national care service, is likely to be one of the most divisive announcements to come out of Labour conference, with some in his party already calling it ‘electoral insanity’.

“Under the change, the State Pension would rise each year by the higher of inflation or 2.5 per cent, while the annual link to earnings would be dropped. The Prime Minister says pensions will still hold their value relative to earnings over time. This would continue to protect pensioners against rising prices, but their State Pensions could grow more slowly than they do now.

“The detail of the changes is still to be seen, but it is important to remember that while the triple lock has historically made the State Pension more generous, it is still rarely enough to fund the retirement most people picture. Moving to a ‘double lock’ could leave a larger gap between what retirees receive from the state and what they actually need.

“While reform may help address long-term pressures from an ageing population and rising pension costs, it would also reinforce the importance of building private retirement savings alongside the State Pension. Where possible, people should make full use of employer pension contributions and the tax advantages available through workplace pensions, SIPPs and ISAs.”