Rolling coverage of the latest economic and financial news, as wage growth – used to set triple-lock pension – slows to 3.9% Supporters of the pension triple lock point out that it has lifted the living standards of the UK’s poorest pensioners. Critics, though, argue that it has been more expensive than expected, and ties the government into increasing the pension bill each year regardless of economic conditions. The triple lock has increased annual spending on the state pension by around £16 billion, compared with uprating in line with average earnings growth since 2010. Current forecasts from the Office for Budget Responsibility suggest that the triple lock will push up state pension spending by £600 million per year in 2029–30, compared with a baseline of increases in line with average earnings. While this is small compared with total state pension spending (of £154 billion per year), each increase adds up over time and the triple lock’s ratcheting effect permanently locks in increases in spending. This is both costly and very uncertain in the long run, because it depends on the exact path of inflation and earnings. We estimate that by 2050 keeping the triple lock would, in expectation, cost around £20 billion per year in today’s terms. But the high uncertainty means that, in fact, the cost could reasonably be anywhere between £5 billion and £40 billion per year. Continue reading...