Expert Gareth Shaw offers advice on building entitlement to the state pension
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As part of the triple lock, state pensions must be increased in line with inflation, earnings growth, or 2.5 percent, whichever is highest.
It was introduced in 2010 by the Coalition Government to ensure that the state pension would not lose value in real terms.
Despite both wages and inflation being hit hard by the pandemic, pensioners saw their retirement pots remain steady with a healthy 2.5 percent rise.
However this looks set to change, with wages jumping 8.8 percent in the three months to June, according to the latest official figures.
This artificial rise is primarily due to the easing of lockdown restrictions, the economy’s slow return to normalcy and the withdrawal of the furlough scheme.
Currently, the Government’s new state pension comes to a maximum of £179.60 a week per individual.
If the 8.8 percent rise was to be implemented by Mr Sunak next year, another £15.80 would be added weekly to the average pensioner’s income, equating to £822 a year.
However, the actual increase will not be confirmed until the publication of July’s earnings figures next month.
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Some experts believe that is likely this amount could be even higher, which would give pensioners an even richer retirement pot.
Writing for inews.co.uk, Baroness Altman outlined her concerns over scrapping the triple lock, and cautioned Mr Johnson and Mr Sunak to take another course of action.
“There are clear signs that the Chancellor plans to abandon the state pension triple lock, removing the promised protection for pensioners,” she said?
“This would be an attack on pensioner incomes, breaking the manifesto commitment that, until now, the Prime Minister has said was sacrosanct. I urge a rethink.
“The triple lock means state pensions will rise annually by the best of price inflation, earnings rises or 2.5 per cent. The Chancellor wants to scrap the earnings link because the Treasury fears it will cost too much and the public finances have been hard hit by the pandemic, so he is looking for ways to save money.
“It is really a political symbol, rather than sound policy, like so many other aspects of state support for pensioners. A 2.5 percent minimum has no economic or social rationale and using this for next year’s pension uprating is well below price and earnings inflation.”
According to the Conservative peer, the Government should look at the past mistakes of other administrations to see why the triple lock should remain intact.
She added: “Successive Governments have fiddled with state pension uprating for decades, sometimes improving it, then removing previous protections.
“The changes usually reflected political judgments of pensioner voting patterns. This is no way to run state pensions on which millions of poor pensioners – predominantly women – depend.
“During the 1970s, basic state pension was double-locked, tied to the highest of earnings or price inflation.
“By 1979, it was worth 26 percent of average earnings. Then the earnings link was abandoned, with only price inflation increases each year.
“In 2001, low inflation led to a 75p rise in weekly pension, creating a political furore. So the government promised a minimum uprating of at least 2.5 percent – and also introduced pension credit for the poorest.”
Slamming the UK’s state pension as subpar, the Baroness did concede reform as being necessary to removing the complexity of the pension system.
“Until now, the triple lock was sacrosanct as a totemic symbol of pensioner protection. However, the state pension system’s complexity has allowed politicians to hide that it protects the youngest pensioners best, not the oldest and poorest,” she explained.
“The UK pays the worst state pension in the developed world. Uprating is important, especially as the UK has huge variations in pensioner incomes. Some may be very well-off, but millions are not, and the state pension is still less than a quarter of average earnings.
“A comprehensive review of all state-pensioner support is needed, not continued political knee-jerk changes, which future governments fear to undo.”
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