Some good news
Wednesday 7th September 2022
Katy Baxter
In these times of doom and gloom finding something to cheer about can be more difficult but I have found something.
The so called 'triple-lock' guarantees that the state pension will rise in line with inflation, average wage growth or 2.5% - whichever is highest. The measure was paused in 2022 due to the impact of COVID on public finances but it is going to be being reinstated in April 2023 which is good news and will result in a large rise for those receiving state pensions. Inflation of more than 10% will see the basic state pension rise to more than £155 a week, while those who have reached state pension age since 2016 could see their weekly payments rise beyond £200 a week.
The Government had already promised to reinstate the Triple Lock before the current leadership contest had begun, but now the candidates have left us in no doubt that they would hand pensioners a big pay rise. In particular, our new Prime Minister Liz Truss has promised to commit to the Triple Lock for the next three years. That's extra significant given the latest forecasts from the Bank of England this week that inflation is set to still be near today's elevated levels in a year's time. In cash terms, a 10% rise would take the new State Pension from £185.15 to £203.66 per week. It would also take the annual income from a full State Pension to £10,590.32 - the first time the payment has been worth more than £10,000 a year.
The increase is justifiable on the grounds that pensioners include some of the most financially vulnerable people in society, and many will be struggling to meet the costs of soaring heating and food bills already. With the cost-of-living rising, clients may need to increase or have already increased, the withdrawals from pension plans to maintain lifestyles and pay bills. If this continues for a longer than anticipated period pension funds can reduce faster than what was projected so the triple-lock is likely to help provide a bit of a help against this.
For those people with retirement on their horizon they cannot assume the Triple Lock will continue unchanged so with the help of financial advice they need to plan their private and workplace pension to generate the lifestyle they want in the future at a sustainable rate. Please do get in touch if you want to discuss any aspects of retirement planning.
The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction.