The government has confirmed that it will break its State Pension triple lock pledge next year due to a spike in average earnings as a result of the pandemic. The Government will suspend the triple lock for 2022/23, with the rise instead being the higher of inflation or 2.5%. The move means pensions will not rise by 8% next April because of a surge in annual wage growth. With inflation rising it is likely that the eventual increase will be in the 3-4% range, pension consultants LCP estimate. The move is estimated to save the Treasury around £4bn.
The vast majority of retired people give up work without seeking help from any expert source such as a professional adviser or the government’s free pensions guidance service, according to new research. Just 10% of retired and semi-retired people aged 55+ saw their own financial adviser, 4% saw an adviser arranged by their employer and 4% used the Pension Wise guidance service. Among the 55-64 age group, 9% used Pension Wise, still far below the government’s stated ambition to make it ‘the norm’.
Recent changes to state pensions and trends in private pension provision mean that women who lose their husbands could face a much bigger fall in their standard of living than in the past. Recently-retired couples and those approaching retirement are being urged to check their position and make sure they are better prepared.
Inflation rose by 2.5% in the 12 months to June 2021, up from 2.1% in May, according to the latest figures from the ONS. On a monthly basis, rose by 0.5% in June, compared with a rise of 0.1% in June 2020. CPIH The Consumer Prices Index including owner occupiers’ housing costs, costs, rose by 2.4% in the 12 months to June, up from 2.1% in May, rising by 0.4% on a monthly basis.
The government is reportedly planning reductions to the pensions lifetime allowance to recoup costs in this Autumn's Budget. The Treasury is considering plans to change the way pension contributions are taxed, following a huge increase in public spending during the pandemic. One proposal is to cut the pensions lifetime allowance (LTA) from £1,073,100 to £800,000 in the next Budget. In this year's Spring Budget, the Chancellor pledged to freeze the current LTA rate at £1.073m until April 2026.