The UK government must scrap the state pension triple lock to tackle its vulnerable public finances, according to the Organisation for Economic Cooperation and Development (OECD).

In its latest survey of the country’s economy , the body said that the triple lock “puts upward pressure on public expenditure and adds significant fiscal risks by exposing public finances to supply shocks”. Basing annual increases on an average of earnings and inflation could make savings worth 2% of GDP in the long term, it argued.

The OECD also said that ministers should review state pension indexation in the medium term to preserve fiscal sustainability while maintaining adequacy. It added that stronger work incentives and expanded private pensions would improve retirement incomes and reduce future fiscal pressures.

The report followed recent Office for Budget Responsibility (OBR) projections that state pension spending will rise from 5% to 9% of GDP in the next 50 years, driven by population ageing and the triple lock. If the pension were uprated in line with average earnings, spending would reach around 7% of GDP, it estimated.

The OECD also warned that “modest growth, high public debt, high interest payments and increasing spending pressures from ageing, climate and defence are limiting fiscal space” for the UK government. It called for regional productivity gaps to be tackled through better transport connectivity, engaging employers to connect people with opportunities, and boosting local government staffing, expertise and funding. The energy transition should also strengthen energy security while ensuring lower, more stable costs, it said.

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