Key Takeaways
- After Keir Starmer quits, a change in Labour leader will bring a new chancellor and pensions minister.
- Pressure is building on government to end the state pension triple lock commitment, but the policy looks likely to stay.
- In the latest tax year, the UK government spent £146.1 billion on the state pension.
Keir Starmer’s resignation on June 22 means Britain now will get its seventh prime minister since the Brexit vote 10 years ago. After the Makerfield by-election, this is likely to be Andy Burnham, who is expected to chose a new chancellor and pensions minister, the ninth to hold the post in a decade. Pensions are already front of mind for Starmer’s successor: In mid-June, Burnham committed to keep the triple lock, but experts say this commitment may waver as pressure mounts on an “unaffordable” policy.
While attention is focused on the high turnover at No. 10 Downing Street, the revolving door at the Department for Work and Pensions is also a concern at a time when those saving for retirement are in urgent need of clarity and stability. Recent surveys show how far Britons are from a comfortable retirement. For savers and investors, much depends also on Burnham’s choice of chancellor and what plans they have for personal finance and fiscal policy.
The current front-runner to be the next UK leader has broadly suggested he wants government to take a more interventionist role, from public utilities to housing. He has recently reaffirmed the government’s commitment to the triple lock, a pensions policy that is under intense scrutiny. He’s also waded into the debate about compensating women who felt misled by changes to the state pension age.
“Popular spending promises aren’t always good politics for would-be prime ministers,” says the Institute for Government’s Jill Rutter, comparing Burnham to Keir Starmer for an unwillingness to “confront (and stick to) difficult choices.”
Away from the drama in Westminster, a second Pension Commission is quietly going about its business. While the commission will publish its final report in spring 2027, most industry experts expect it to conclude that people need to work longer, with those over 50 rejoining the workforce to fund a decent retirement.
Will the State Pension Age Rise Under Andy Burnham?
Most agree the state pension age will have to rise. The question is how quickly. “Working longer—and in particular reducing labor market inactivity among people in their fifties—is a necessary part of achieving adequate incomes in retirement,” the Pension Commission’s interim report acknowledges. This will not be a popular decision, especially as—according to the Office for National Statistics—healthy” life expectancy is dropping and AI is threatening to disrupt the already difficult job market for older workers.
As research from Pensions UK recently showed, the state pension will be the difference between many people achieving a “minimum” standard of retirement living and poverty.
The commission’s interim report has already said 15 million people are not saving enough, with those on low incomes and in self-employment particularly vulnerable to a low “replacement rate”—the amount of money needed in retirement to replace a paid income.
What Is the Triple Lock?
- The triple lock is a spending commitment made by the UK government more than 15 years ago.
- It ensures that state pension payments rise every April by the higher of Consumer Prices Index inflation, wage growth, or a minimum of 2.5%.
- Under the triple lock, the weekly state pension has increased from just over £100 per week for a single person in 2011 to £241 per week in April 2026.
Pressure Builds on the Triple Lock
The Pension Commission stopped short of making early recommendations on the triple lock, which increases state pension payments by the higher of wages, inflation, or a minimum of 2.5%.
But pressure is mounting on the policy. The Office for Budget Responsibility, the official fiscal watchdog, says the triple lock could put the government’s finances on an “unsustainable path” and cost £15 billion a year by the end of the decade.
The Resolution Foundation, a think tank once led by the current pensions minister Torsten Bell, has called for the policy to be scrapped.
“As well as being unfair, it is also not fiscally sustainable for the state pension to rise forever by more than the earnings of a typical worker,” it says.
The Tony Blair Institute, a think tank run by the former prime minister, says the triple lock is an “unaffordable” policy. Rachel Reeves’ predecessor in the Treasury as chancellor, Jeremy Hunt, describes the triple lock as “unaffordable and immoral” as well as a “drag on economic growth.”
In the 2025/26 tax year, the government spent £146.1 billion on the state pension. Earnings and inflation—not the 2.5% baseline—have triggered the majority of state pension triple lock increases in the last 15 years, as the following table shows:
According to AJ Bell, over two-thirds of “baby boomers” want to see the triple lock stay. Just 14% of Generation Z and 22% of millennials agree. At some point the government of the day will have to address this disparity in opinion.
Will Keir Starmer’s Successor Target Pension Tax Relief?
There are other options for a new prime minister in raising revenue by reforming pensions.
Andy Burnham has said he will stick to his party’s 2024 manifesto commitment not to raise the headline rates of income tax, VAT, or national insurance.
It’s possible changes to pension tax relief—alongside reductions in the pension tax-free lump sum—will offer Starmer’s successor a means of targeting wealth, and raising revenue, without deploying headline wealth taxes. This issue has been dodged by different chancellors over a number of years. It’s possible that Andy Burnham, and his new chancellor, may do so too.
“Having already reiterated the 2024 manifesto tax pledges, his room for maneuver is limited,” the Institute for Government’s Rutter says.
At the moment, savers receive tax relief on their pension contributions in accordance with their marginal rate of tax, a policy that costs the government more than £50 billion each year. Moving to a lower, “flat rate,” has long been vaunted as a way of saving money, simplifying the system and making pensions more beneficial to those on lower incomes—at the expense of higher earners. But there’s a problem: Nobody agrees on the question of fairness.
In their interim report, the Pension Commission’s authors framed pension tax relief as “regressive,” as basic rate taxpayers, who represent the majority of taxpayers, don’t receive as much tax relief as those on the higher—and additional—rate of tax.
Paul Johnson, a former director of the Institute For Fiscal Studies and respected critic of government spending plans, in a recent article, argued the opposite. It’s “not so outrageous” that higher and additional rate income tax payers get tax relief because they pay nearly three quarters of all income tax.
