The Treasury face a UK state pension increase of 8.5% next year because of the increasingly controversial “triple lock”, which continues to raise the incomes of retired people faster than those who are working.
An 8.5% increase would take the new state pension to over £11,500 for those with a full national insurance record, and follows the 10% increase that came into effect this year.
The triple lock guarantees that the state pension will rise each year by the greater of average wage growth, inflation, or 2.5%.
While it’s good news for those who are already in receipt of their state pension, the Institute for Fiscal Studies has warned of the dangers of the triple lock, stating it creates “significant uncertainty regarding the state pension people might receive in the future”.
The IFS speculate that there may be increases in the state pension age to help the government fund the increasing cost of state pension provision. The current state pension age is set at 66, and this is scheduled to rise to 67 in 2028.
Further increases are sure to be extremely unpopular, particularly with those who are nearing retirement.
The state pension forms an essential part of your retirement planning. For those with a full record of national insurance contributions, a guaranteed annual income of £11,500 provides a great foundation, which can be topped up with personal pensions, savings and investments and rental income.
Call 020 3794 3480 to speak with one of our financial planners, and start planning for your retirement.
The contents featured in this publication are for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.
All information It is based upon our current understanding of current legislation and HMRC guidance. While we believe this interpretation to be correct, it cannot be guaranteed that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Thresholds, percentage rates and tax legislation may change in Finance Acts and bases of, and reliefs from, taxation are subject to change and their value depends on an individual’s personal circumstances. Investments carry risk. The value of your investments (and income from them) can go down as well as up, and you may get back less than you invested. Past performance is not a reliable indicator of future results. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.