Work and Pensions Secretary Pat McFadden has set out an adjusted state pension triple lock that will take effect from April 2030.
The Government will retain the existing system for the rest of this Parliament. McFadden said that would lift the full new state pension by £575 this year and leave it more than £2,000 a year higher by the end of the Parliament than in 2024.
From April 2030, the pension will rise by the highest of inflation, 2.5 per cent or the amount required to maintain its record-high level relative to average earnings. It will therefore continue to increase annually but will not keep growing indefinitely as a share of earnings.
McFadden told MPs that the revised mechanism would save an estimated £15 billion a year by the end of the next decade, rising to around £50 billion a year by 2050.
The Government intends the savings to contribute to free personal care through a new national care service. It has also asked the Pensions Commission to recommend further help for lower-income pensioners when it reports next year.
The announcement rejects alternatives including means-testing the state pension or removing the earnings link. Opposition MPs argued that the change weakened the triple lock and questioned the projected savings and social-care costs.
