State pension payments will cost every working-age Briton £1,000 due to the Labour Government’s decision to keep the triple lock in place, new research has found.
The Department for Work and Pensions (DWP) benefit’s bill is set to surge by £35.1billion over the course of this parliament, reaching £171.7billion annually by 2029-30, according to analysis from wealth management firm Quilter.
The figures, based on official estimates, show the cost climbing from £136.6billion in 2024-25. Quilter calculates this increase amounts to £1,093 for every income taxpayer aged under 65.
When adjusted for the consumer price index (CPI) inflation, the burden per worker rises by £561 by the parliament’s end.
State pension payments will cost workers £1,000 due to the triple lock
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Adam Cole, a retirement savings specialist at Quilter, said: “An increase of more than £35billion in nominal terms is not just an abstract number on a Treasury balance sheet, it ultimately has to be met by today’s working population through higher taxes, more borrowing, or cuts elsewhere.”
The demographic pressures behind this mounting bill are substantial. Baby boomers, those born between 1946 and 1964, are now retiring in large numbers, driving pension expenditure sharply higher this decade.
Over-65s currently represent approximately one-fifth of the UK population, a proportion the Office for National Statistics (ONS) projects will exceed one quarter within 50 years.
State pension spending has grown dramatically as a share of national output, rising from 2pc of GDP during the early 1950s to more than seven per cent today.
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The triple lock mechanism compounds these pressures, guaranteeing annual increases matching whichever is highest among inflation, wage growth, or 2.5 per cent.
This April, millions of pensioners will see payments rise by 4.8 per cent, taking the full new state pension to £12,547.60.
Policymakers are increasingly united in the view that the pension age must rise more rapidly to sustain the system.
Furthermore, the state pension age increases from 66 to 67 this year, with a gradual rise to 68 scheduled by 2046.
Sir Steve Webb, former pensions minister and now at consultancy LCP, said the review of the state pension age this year is likely to recommend a faster rise.
He added: “Ministers will also come under pressure to make state pension increases less generous, with debate increasingly turning to a mechanism to replace the triple lock.”
However, Mr Webb cautioned that cutting costs carries risks. Many current workers face poor retirement prospects due to inadequate private pension savings, and reducing state pension generosity would worsen their situation.
The DWP has challenged Quilter’s findings, with a spokesman stating: “The calculation is flawed as it makes false assumptions about the UK taxpaying population.”
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Quilter’s methodology assumed income taxpayers under 65 would increase by 7.3 per cent during this parliament, matching ONS population growth projections for 2022 to 2032.
This would see numbers rise from 29.9 million currently to 32.1 million by 2029-30.
The DWP spokesman added: “The working-age population is projected to grow over the course of this parliament and pensioners also pay tax on income above the personal allowance rate, neither of which has been accounted for.”