Experts believe ministers will have to explore alternative options
The state pension triple lock could potentially be tweaked so there is cap on how much pension payments can increase each year, it is claimed.
The triple lock ensure pensions rise each year to match whatever is highest out of inflation, wage growth and 2.5% and is hugely costly to the Government.
And there are warnings triple lock costs could balloon to £15.5 billion by 2029/30, piling pressure on the national finances.
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It comes amid increased debate about the future of the triple lock, which critics say is unaffordable.
Keir Starmer says Labour is committed to the triple lock for the current Parliament, following suggestions the Conservatives would look to make changes.
Uncertainty over inflation or wage growth in any given year leaves the Government vulnerable on pensions, as they could potentially rocket at any time under the terms of the policy.
Now experts have suggested one way the Government could try to keep the state pension bill down is to introduce a cap on the triple lock, Mirror reports.
Martin Hartley, group CCO of international consultancy emagine, said options could include a “cap on annual increases” or a dedicated pension reserve fund.
He explained: “This would allow the Government to smooth pension payments over time and align uprating decisions with long-term fiscal health rather than short-term political considerations.”
Caitlin Southall, from financial services group WBR Group, added the Government could introduce an “upper limit on the state pension increases” to allow ministers to accurately predict how much it will be each year.
She also joined calls for pensions to be linked solely to wages: “I would suggest that the best way to approach this is to change the mechanism for annual increases so that the increase is in line with average earnings.
“This would ensure that retirees and the working population would theoretically see their income increase similarly.”
She added Government promises were not necessarily set in stone.
“Absolutely the Government could be forced to make changes to the policy during this Parliament.
“Because of the current mechanisms to increase the state pension, the cost of the policy is unpredictable.”