Martin Lewis has taken to X to cut through the confusion surrounding Andy Burnham’s proposed shake-up of the state pension, reassuring millions of retirees that their payments will still go up.
The money-saving expert posted a detailed breakdown after Mr Burnham announced plans to replace the triple lock with a double lock from 30 April.
Mr Lewis said: “Many are confused, and think the State Pension won’t rise. Actually the change is subtle, it’s about loosening, not ending, one of the three locks – the link to average earnings.”
He added that he wanted “to try to explain as simply as I can” how the reform would work in practice.
The post quickly gained traction online, with pensioners and financial commentators seeking clarity on what the policy shift would actually mean for annual pension increases.
Under the current triple lock, the state pension rises each April by whichever is highest out of 2.5 per cent, CPI inflation, or average earnings growth.
Mr Lewis explained that the proposed new system would guarantee annual increases of at least the higher of 2.5 per cent or CPI inflation. The crucial difference lies in how earnings are factored in.
He said: “The ‘at least’ is because it will also rise due to average earnings, but not specifically for that year instead over a longer period.”
Rather than matching earnings growth year by year, the new approach would smooth the link to wages across a longer timeframe, beginning from a start date of 2030.
Mr Lewis noted that “the exact mechanisms aren’t set out” but offered a worked example to illustrate how the change might play out in practice.
Martin Lewis explains state pension triple lock reform
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ITV/THE MARTIN LEWIS MONEY SHOW LIVEUsing a hypothetical three-year scenario, Mr Lewis illustrated the difference between the two systems.
Under the current triple lock, he assumed inflation of 3 per cent in year one, 4 per cent in year two, and 3 per cent in year three, with earnings growth of 2 per cent, 6 per cent, and 1 per cent respectively.
In the existing system, the pension would rise by 3 per cent, then 6 per cent, then 3 per cent, producing a compounded total increase of 12.5 per cent across the three years.
Under the proposed model, year two would differ. Mr Lewis explained: “A rise of only 4% would be a total rise since the start of 7.1%, yet that’s less than the total rise in average earnings of 8.1%. So the Pension would rise about 5% that year to match the total rise in average earnings.”
Mr Lewis was careful to stress that his worked example was an approximation rather than a definitive guide
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GETTY / ITV / THE MARTIN LEWIS MONEY SHOW LIVEThe result would be a total increase of 11.4 per cent over three years, compared with 12.5 per cent under the current arrangement.
Mr Lewis was careful to stress that his worked example was an approximation rather than a definitive guide to how the policy would operate.
He said: “I hope that makes sense, again this is just a rough example to give you an idea as best as I understand it, but I think I’m in the ballpark.”
The financial expert also acknowledged that the government has yet to publish the precise mechanics of how the smoothed earnings link will function in practice.
Mr Lewis told his followers he would attempt to produce a video explaining the reform, noting: “I will try and do a video on it if time as that may make it easier to understand.”
The post underscored that while the change would modestly reduce pension growth over time, it would not end annual increases for retirees.