Pensions Bulletin 2026/39
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This edition: State Pension triple lock to be adjusted from 2030 and HMRC Pension Schemes Newsletter 185.
State Pension triple lock to be adjusted from 2030
At the Labour Party Conference on 29 September, Prime Minister Andy Burnham announced that the current State Pension triple lock will remain in place for the rest of this Parliament but will be adjusted from April 2030.
Under the revised approach, the State Pension would increase each year by at least the higher of Consumer Prices Index (CPI) inflation and 2.5%. It would also receive any additional increase needed to maintain its value relative to average earnings over time. This replaces the current annual ‘highest of earnings, inflation or 2.5%’ test, while retaining some form of earnings link in the longer term. The Government gives an indication of what this means by saying “for example, if the value of the State Pension is around a third of average earnings by 2030/31, as average earnings rise, the State Pension will rise in line with that too.”
The Government intends to use the resulting savings to help fund a phased National Care Service offering free personal care based on need. Its costings publication estimates that the change would reduce State Pension spending, relative to retaining the current triple lock, by around £15bn a year in nominal terms by 2039/40, rising to around £50bn a year by 2049/50 (equivalent to £11bn and £30bn respectively in 2025/26 prices). The analysis projects that pensioner relative poverty after housing costs would fall from around 14% in 2024/25 to around 8% in 2049/50 under the adjusted policy, though these are long-term modelled estimates and depend on economic and demographic assumptions.
The Government intends to legislate for the change during this Parliament.
Comment
The Government’s proposal could be viewed as a modified, or ‘soft’ triple lock rather than a straightforward double lock.
Our understanding is that the check to ensure that value is maintained relative to average earnings over time will be carried out every year. The key difference between the current triple lock and the new proposals will therefore be the removal of the permanent ratchet up in the level of the State Pension that the current formula delivers in any year where earnings growth is not the highest increase. This will mean that in the long run the State Pension will always be at or around a fixed share of average earnings.
And it will be interesting to see how the Pensions Commission takes account of the impact of this proposal on adequacy of retirement incomes when delivering its final recommendations to the Government next spring. (see Pensions Bulletin 2026/20).
HMRC Pension Schemes Newsletter 185
HMRC has used its latest Pension Schemes Newsletter to remind readers that the Pension Schemes Online service will close in April 2027 (see Pensions Bulletin 2023/27). Scheme administrators should migrate all schemes that remain shown as open to the Managing Pension Schemes service by 31 December 2026, to help avoid disruption to scheme management and reporting.
The newsletter also reminds administrators that reporting that a scheme has wound up does not always remove the need to submit a pension scheme return. Where the scheme wound up in the current year and HMRC issues a notice, the return must generally be filed within three months of the notice. For an outstanding return for a previous year, where winding-up completed before 31 October in the following tax year, the return must be filed within three months of the date wind-up was completed. Late filing can result in a £100 penalty and daily penalties of up to £60.
HMRC also flags that the government intends to simplify the taxation of certain lump-sum death benefits paid above the lump sum and death benefit allowance, while retaining taxation on these payments at the beneficiary’s marginal income-tax rate.
Finally, relief-at-source schemes who submitted interim repayment claims in 2026/27 and still have outstanding 2025/26 annual returns and APSS590 declarations should act promptly, as HMRC will withhold further interim repayments until it has received both documents. Administrators should also ensure that the correct references are used in the annual-return file name and return itself, as incorrect references will result in the HMRC systems rejecting the submission.
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