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A leading economist has called for the UK’s “triple lock” pension system to be replaced with a model similar to Australia’s, arguing the current approach is financially unsustainable.
The triple lock, introduced in April 2011, guarantees that the state pension rises each year by the highest of inflation, average earnings growth, or 2.5%. While strongly defended by supporters who see it as vital protection for pensioners, critics increasingly question whether it can be maintained long term.
In January, former Labour cabinet minister Alan Milburn warned that the policy risks creating a “fiscal time bomb.” He argued that while older generations benefit from a guaranteed income boost, younger people receive no comparable support. Milburn suggested easing the triple lock and redirecting funds toward youth employment.
For many retirees, however, the triple lock is more than a political debate—it is essential financial security. Since its introduction, it has helped lift millions of pensioners out of poverty by safeguarding their income against rising prices and protecting living standards.
Laurence O’Brien, senior research economist at the Institute for Fiscal Studies, believes reform is necessary. He said the triple lock causes the state pension to grow faster than the overall economy, which ultimately requires higher taxes to sustain it.
Instead, O’Brien proposes a “smoothed earnings link,” similar to Australia’s system. Under this model, pensions would remain tied to average earnings over the long term while still guaranteeing protection against inflation. Payments would increase at least in line with prices, but without the permanent upward ratchet effect created by the triple lock.
Australia’s approach links pensions to a fixed share of average earnings. When inflation rises above wage growth, temporary price indexation is applied, but over time payments return to their earnings-based benchmark. This system aims to balance fairness for pensioners with long-term financial stability.
O’Brien emphasized that while the triple lock was designed with good intentions—to shield retirees from rising costs and maintain living standards—it now risks driving unpredictable and escalating costs. He compared it to “pressing the accelerator after every shock but never applying the brake,” warning that such a structure is difficult to control at a time when public finances face mounting pressures, including increased defence spending.
