There are few political third rails hotter than the state pension. Touch it, however lightly, and every party retreats as if scorched. That is why, despite the increasingly frantic fiscal arithmetic ahead of the looming Budget, no politician dares utter the obvious: the state pension triple lock must go.
Under the triple lock, the state pension increases each year in line with whichever is the highest of consumer price inflation (CPI), growth in average earnings, or 2.5 per cent. That triple lock is defended as sacrosanct, but in reality it increasingly props up people who are already well off.
Whisper it, but state pension payments should also be means-tested, especially when the top 10 per cent of pension-savvy individuals hold a median private pension wealth of £637,500.
The figures are stark: almost two-thirds (64 per cent) of all private pension wealth is concentrated in that top 10 per cent, while the bottom half of the population holds less than one per cent. Meanwhile, over 1.1 million people in the UK have private pension pots of £1m or more.
Yet the state pension, funded by today’s workers, is paid universally, regardless of how fat your private pot might be. A homeowner in Surrey with half a million pounds in defined contribution savings still draws the full state pension, while someone younger, renting and without savings, subsidises it.
To put that in perspective, average pension wealth in Great Britain is pitifully low for most. The average (among those who have any pension wealth) for 55–64-year-olds is only about £137,800, and for 65–74-year-olds around £145,900. That’s a far cry from the many in that top 10 per cent who already enjoy seven-figure retirement war chests.
So, why not means-test? Because, politically, it’s radioactive. Remove or dilute the triple lock, suggest tapering the state pension for those with large private pots, and suddenly every tabloid headline is “Granny Tax” or “Attack on Elderly.” It’s an election loser. No mainstream party will touch it.
The bureaucracy would also be a nightmare. Means-testing pensions isn’t like trimming winter fuel payments; you’re looking at assessing individual retirement savings, property, income – the list goes on. It’s a bureaucratic tangle and would require a vast, intrusive administrative machine. But, complexity alone can’t justify maintaining such a regressive system. Look at other benefits systems: Universal Credit calculations deal with fluctuating income week by week. HMRC tracks offshore income and shareholdings. Yet somehow, we can’t work out who actually needs a full state pension?
Yes, there must be exceptions. Single pensioners, those who rented all their lives, people whose “wealth” is tied up in bricks rather than liquidity – any reform should protect them. But, that is entirely feasible.
What we persist with instead is a political compromise that advantages the already wealthy older people at the cost of younger, less asset-rich generations. The triple lock, once a well-intentioned promise, can now act like a regressive grant to those who least need it. By refusing to means-test the state pension, we are choosing simplicity over fairness and optics over sustainability.
In short: abolish or soften the triple lock, means-test the state pension for wealthy retirees, and protect the vulnerable. It’s obvious, fair and economically essential. But of course, it’s never going to happen. Because in British politics, today, “pensioners deserve it” will always win over “state support should be based on need”.
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