A leading think tank has proposed scrapping the state pension triple lock to secure a potential £19billion in Government savings by the mid-2030s for future generations.
The Intergenerational Foundation has called on ministers to consider reform to the payment uprate mechanism, which is forecast to be £10billion more expensive a year than forecast, based on Institute of Fiscal Studies (IFS) figures.
Based on the organisation's data, it calculated that such a move would amount to nearly £1,000 for every working household in Britain.
Under the triple lock, state pension payment rates are guaranteed to increase by the highest of either inflation, average wage growth, or 2.5 per cent.
Think tanks are calling for the state pension triple lock to be scrapped
| GETTYThe proposed reforms would generate even greater savings in subsequent years, reaching £28.5billion by 2040 and £38billion by 2045.
Over the past decade, pensioners have gained approximately £1,300 more per year compared to what they would have received under inflation-only adjustments.
However, the policy faces mounting criticism over its sustainability. The real-terms expense of the state pension has climbed by 70 per cent across two decades, prompting questions about whether the guarantee remains viable for future generations of taxpayers.
The foundation's alternative approach would tie state pension increases solely to inflation until 2030-31, before switching to a formula based on the average of inflation and wage growth.
How the state pension triple lock has changed over the years | GB NEWS / FIDELITY INTERNATIONAL LATEST DEVELOPMENTS
What has the impact of the state pension triple lock been on the public's finances | OBR This middle-ground method would maintain the link between pensions and living costs whilst curbing the unpredictable surges seen under the current arrangement.
To address concerns about vulnerable retirees, the organisation proposes channelling some savings into a new £30 weekly supplement for those receiving Pension Credit.
This benefit currently tops up income to £238 weekly for single pensioners or £363.25 for couples.
The supplement, worth £1,560 annually, would cost approximately £1.9 billion by 2035, representing 10 per cent of total savings.
How much will the state pension triple lock cost the British taxpayer? | OBR Conor Nakkan, an analyst from the foundation said: "The triple lock may have been introduced with good intentions but it has become an expensive and poorly targeted policy.
"It now delivers large increases to all pensioners, including millions who are already well-off, while younger generations face stagnant living standards, high housing costs and a growing tax burden."
Tom Selby from AJ Bell warned that maintaining the triple lock increases the likelihood of further rises to the state pension age, which is already climbing from 66 to 67 by April 2028 and scheduled to reach 68 between 2044 and 2046.