The future of the UK state pension is back under the spotlight today as fresh Department for Work and Pensions (DWP) modelling reveals how many people could face a poorer old age if the state pension “triple lock” is cut back — just as Chancellor Rachel Reeves weighs controversial tax changes that critics brand a “raid on pensions”. [1]
The new figures, uncovered via a Freedom of Information (FOI) request by consultancy LCP and former pensions minister Sir Steve Webb, suggest that up to 26.1 million working‑age Britons could be under‑saving for retirement if the triple lock is replaced with less generous uprating. [2]
At the same time, reports in The Times, the Financial Times and The Telegraph warn that Reeves is actively examining ways to squeeze more tax from pension saving in her Autumn Budget on 26 November, including curbs on salary sacrifice schemes and possible changes affecting working pensioners. [3]
Taken together, the data and the Budget speculation lay bare a stark question at the heart of UK economic policy this week: how far can a cash‑strapped government push pensions without triggering a retirement poverty crisis?
What is the state pension triple lock – and why does it matter now?
The triple lock guarantees that the basic and new state pension rise each year by the highest of:
- average earnings growth
- inflation (CPI)
- 2.5%
It was introduced in 2011 to stop the state pension eroding in real terms and has significantly boosted pensioner incomes over the past decade. The House of Commons Library estimates that triple‑locked pensions are now around 11% higher than if they had simply tracked earnings or inflation since 2011. [4]
For 2025–26, official figures show:
- The new state pension (for those reaching pension age after 2016) is £230.25 per week – about £11,973 a year. [5]
- The basic state pension (older system) is £176.45 per week. [6]
Under current rules, the next uprating in April 2026 is expected to be driven by earnings growth of about 4.8%, pushing the full new state pension to within roughly £22 of the frozen £12,570 income tax personal allowance, according to AJ Bell analysis cited by Trustnet. [7]
That’s great news for many retirees — but it’s also why state pensions have become a huge and growing line in the welfare budget.
Trustnet notes that:
- State pension benefits already account for over 80% of the £175bn pensioner welfare bill.
- Without reforms, the cost of the state pension alone could climb to almost 8% of GDP over the next 50 years. [8]
Politically, Labour entered government promising to keep the triple lock for the life of this parliament, a pledge repeatedly made by Keir Starmer before the 2024 election. [9]
That promise now collides with some sobering new numbers.
The new DWP figures: how bad could it get if the triple lock goes?
The DWP’s latest modelling, obtained by LCP via FOI and first reported by specialist pensions outlets before being picked up by national media, looks at what happens if the triple lock is not maintained for the next 50 years. [10]
1. Under current assumptions (triple lock stays)
Working on the assumption that the triple lock continues indefinitely, the DWP estimates:
- 14.6 million working‑age people (around 43%) are under‑saving for retirement – meaning they are likely to see a sharp drop in their standard of living when they stop work. [11]
- 4.6 million are on course to fall below the “minimum” retirement income standard set by Pensions UK – around £13,400 a year for a single person and £21,600 for a couple. [12]
- 25.4 million people (about 73% of the working‑age population) are expected to miss the “moderate” living standard of roughly £31,700 a year. [13]
So even with the triple lock intact, a large share of today’s workers are heading for disappointing retirements.
2. If pensions rise only with earnings
If the state pension were instead linked just to average earnings growth:
- People facing a sharp drop in living standards at retirement jumps from 14.6m to 19m.
- Those falling below the minimum income standard would rise from 4.6m to 6m. [14]
3. If pensions rise only with prices (CPI)
An even less generous scenario – uprating only in line with inflation, as before 2010 – paints the bleakest picture:
- 26.1 million people (77% of workers) would be under‑saving relative to their target replacement rate – a huge rise from 14.6m.
- The number falling below the minimum income standard rises to 11.7 million – roughly one in three of today’s workforce. [15]
- Those failing to reach a “moderate” retirement income rises to 28.8 million. [16]
In other words, the triple lock isn’t just a nice‑to‑have uplift for current retirees. It underpins the assumptions used in official forecasts of whether today’s workers will be able to maintain their living standards when they eventually retire.
Steve Webb argues that current official figures risk lulling the public into a “fool’s paradise” by assuming a triple lock that few experts think will survive unchanged for half a century. [17]
Are we talking about current pensioners or future ones?
A key source of confusion in today’s headlines is who is affected in these scenarios.
- The FOI data focuses on working‑age people today – roughly those still building up their pensions. [18]
- The widely quoted figure that “scrapping the triple lock would push another seven million into retirement poverty” relates to future pensioners, not those already drawing the state pension. [19]
That distinction hasn’t always been clear in social media posts and some headlines, including those based on coverage in The Telegraph and the FT highlighting how poverty rates could more than double over time if protections are diluted. [20]
However, this is not to say current pensioners are comfortable:
- Analysis reported by The Telegraph in October found up to 1.5 million older state pensioners already fall around £8,000 short of the minimum living standard, even after triple lock rises. [21]
- The government’s own projections show spending on pensioner benefits reaching £174.9bn in 2025–26, or 5.8% of GDP, yet it recently rejected calls for a new framework to tackle pensioner poverty. [22]
So today’s debate is really about two overlapping crises:
- Current hardship among some existing pensioners; and
- Future inadequacy for millions of today’s workers if state support is pared back.
Reeves’ ‘pensions tax raid’: salary sacrifice and working pensioners in the crosshairs
Alongside the triple lock debate, attention is turning to how the Treasury might tax pension saving more heavily in the 26 November Budget.
Salary sacrifice under review
At the centre of the storm is the salary sacrifice system, where workers give up part of their salary in exchange for an equivalent employer pension contribution. This not only attracts income tax relief but also reduces National Insurance (NI) bills for both parties. [23]
Multiple reports – including in The Times, Pensions Age, Trustnet and industry briefings – say Reeves is considering:
- Capping the NI advantage on salary sacrifice contributions at around £2,000 a year;
- Potentially raising around £2bn annually for the Treasury. [24]
The proposal has been branded a “pensions tax raid” in coverage by The Times and other outlets, which highlight warnings that the move would shorten future retirement incomes while leaving expensive structural problems in the tax system untouched. [25]
Industry backlash: ‘Don’t punish savers’
Industry reaction has been fierce:
- A poll for the Association of British Insurers (ABI) found two in five (38%) Britons say they would save less into their pension if salary sacrifice is capped. [26]
- AJ Bell estimates that, over a working life, such a cap could mean a £22,000 hit to an average pension pot. [27]
- The chief executive of Aviva has publicly urged Reeves not to raid salary sacrifice schemes, warning it would undermine confidence in long‑term saving. [28]
Pensions experts argue that auto‑enrolment has only just begun to bed in and that hitting one of the main tax‑efficient ways of boosting contributions risks widening the already stark gap between public‑sector pensions and typically less generous private‑sector schemes. [29]
Working pensioners as a tax target
Separately, The Times has reported that over one million people above state pension age who are still in work are being examined as a possible tax target, given they can currently receive a state pension and employment income at the same time. [30]
Any move to increase their tax burden – for example via extended freezes to income tax thresholds or changes to NI rules – would be highly sensitive politically, given older voters’ importance at the ballot box.
Politics: Labour, the Conservatives and the triple lock time bomb
The latest FOI numbers land in the middle of a ferocious political tug‑of‑war.
- Labour: Reeves insists she will keep the triple lock for this parliament but must also plug a sizeable fiscal hole while honouring a separate “triple lock” pledge not to raise income tax, National Insurance or VAT. That leaves her hunting for revenue in narrower, politically delicate areas – hence the focus on pensions tax perks. [31]
- Conservatives: New Tory leader Kemi Badenoch has said she does not want to scrap the triple lock “now”, but pointedly added “let’s see what mess Labour leaves for us”, suggesting the policy could be reviewed in future. [32]
- Public opinion: The Times’ Wealth Survey reports that around one in three taxpayers favour means‑testing the state pension, and about one in five support ending the triple lock, but there is strong opposition among many older and lower‑income voters. [33]
That mix leaves both main parties trying to look fiscally tough yet pensioner‑friendly, a balancing act made harder by the DWP’s new under‑saving projections.
Beware viral claims of an ‘approved £140/month pension cut’
Adding to the confusion, viral articles and social‑media posts today claim the government has already approved a £140‑a‑month cut to the state pension from November 2025. [34]
These stories, hosted on low‑profile lifestyle and click‑through sites, assert that ministers have “signed off” a reduction via changes to indexation rules. However:
- There is no confirmation of such a policy in official DWP or HM Treasury documents. [35]
- Reputable outlets and parliamentary briefings currently refer to future triple lock reviews and modelling, not a legislated across‑the‑board cut to existing pension payments. [36]
Until the Autumn Budget on 26 November or a formal government statement spells out any changes, claims of a specific, approved £140 monthly reduction should be treated with extreme caution.
What this means for you if you’re saving for retirement
While today’s debate is mainly about policy options rather than confirmed cuts, the direction of travel is clear: more of the risk is likely to sit with individual savers.
Without giving personalised financial advice, there are a few high‑level implications from the new data:
- Don’t rely solely on the state pension
Even with the triple lock, official forecasts show millions failing to hit even the minimum or moderate retirement income benchmarks. [37] - Tax perks may become less generous, not more
Proposals to cap salary sacrifice, plus the huge fiscal cost of pension tax relief, suggest future chancellors are more likely to trim incentives than expand them. [38] - Check your own position now
- Get a state pension forecast and check your National Insurance record.
- Review your workplace or personal pension contributions against the Pensions UK “minimum” and “moderate” income standards. [39]
- If you’re unsure, consider speaking to a regulated financial adviser or using free guidance services such as Pension Wise.
- Stay sceptical of unverified online pension ‘news’
If a dramatic claim about cuts or rule changes isn’t reflected on gov.uk, in parliamentary briefings, or in well‑established news outlets, it may be misleading or premature. [40]
The real question for 21 November 2025
As of today, no one has officially scrapped the triple lock. In fact, ministers still point to it as proof they are “supporting pensioners with the cost of living”, boasting that it will raise the state pension by up to £1,900 over the course of this parliament. [41]
But the newly released DWP projections show that tinkering with that promise comes with a clear price: tens of millions more people facing lower living standards in retirement, and up to one in three workers falling below even a bare‑bones income level in old age if the triple lock is watered down. [42]
Against that backdrop, Rachel Reeves’ choices in next week’s Budget – on salary sacrifice, working pensioners and the long‑term shape of the state pension – will go a long way toward deciding whose pockets ultimately pay for Britain’s ageing society: younger workers, current pensioners, or a mix of both.
References
1. moneyweek.com, 2. moneyweek.com, 3. www.thetimes.com, 4. ifs.org.uk, 5. en.wikipedia.org, 6. en.wikipedia.org, 7. www.trustnet.com, 8. www.trustnet.com, 9. www.reuters.com, 10. moneyweek.com, 11. moneyweek.com, 12. moneyweek.com, 13. moneyweek.com, 14. moneyweek.com, 15. moneyweek.com, 16. moneyweek.com, 17. moneyweek.com, 18. moneyweek.com, 19. www.telegraph.co.uk, 20. www.telegraph.co.uk, 21. www.telegraph.co.uk, 22. www.pensionsage.com, 23. www.theguardian.com, 24. www.thetimes.com, 25. www.thetimes.com, 26. www.abi.org.uk, 27. www.trustnet.com, 28. finance.yahoo.com, 29. corporate-adviser.com, 30. www.thetimes.com, 31. www.reuters.com, 32. news.sky.com, 33. www.thetimes.com, 34. www.reteuro.co.uk, 35. www.gov.uk, 36. www.pensionsage.com, 37. moneyweek.com, 38. www.theguardian.com, 39. moneyweek.com, 40. www.reteuro.co.uk, 41. www.gov.uk, 42. moneyweek.com
