In a major speech last week, the Prime Minister, Andy Burnham, confirmed proposed changes to pension income, most notably relating to the state pension triple lock, which could be far reaching. So what do they mean for people retirement planning in Oswestry and Cheshire?
In his announcement, Burnham said that should his party remain in office after the next election, the State Pension triple lock will be reformed from 2030. Thereafter, it will cease to rise by average earnings, CPI inflation or 2.5%. Under the new regime, state pensions will rise more gradually whilst being monitored to ensure they keep up with average earnings. The specifics have yet to be finalised, but analysts expect the triple lock to stay in place for a few years at least, rising around 3.9% in tandem with average earnings.
People concerned about the impact on their state pension may be urged to look at alternative income streams to ensure they have a more comfortable retirement. Recent figures show that only 43% of UK households are able to maintain the lifestyle they desire after retiring. Some financial advisers have encouraged people of working age to ensure they save enough money for the future by investing in workplace or private pensions as early in life and as consistently as possible.
With calculations based on investment growth of 5% and an annual contributions increase of 3%, someone who puts £200 into their pension every month from the age of 22 to 68 is likely to accrue almost double the amount of someone who starts a decade later.
