OECD Urges End to UK Triple Lock Pension Uprating

The Organisation for Economic Co-operation and Development urged the UK government to end the triple lock on state pensions. The Paris-based group said the system puts upward pressure on public expenditure and adds significant fiscal risks by exposing public finances to supply shocks.

The OECD recommended replacing the triple lock with annual increases based on an average of earnings and inflation.

It estimated that the change could generate savings worth 2% of GDP in the long term. The triple lock, introduced in 2010, uprates pensions each year by the highest of wage growth, inflation or 2.5%. The Office for Budget Responsibility has stated that the triple lock has cost three times as much as anticipated when introduced.

The OECD added that public support would need to be built for any reform. In its 140-page UK economy survey, launched at a press conference in London on Wednesday, the OECD said Labour’s pro-growth agenda provides a strong basis for a gradual recovery. It noted that modest growth, high public debt, high interest payments and spending pressures from ageing, climate and defence limit fiscal space.

The OECD also recommended improving the efficiency of hospital operations and prioritising tax reforms that strengthen efficiency and revenues rather than raising headline rates. It stated that the tax burden is already high while the system remains complex and distortionary.

Rachel Reeves, who served two years as chancellor, used her final Mansion House speech to defend her decisions and said she had proven the doubters wrong.