Pensions - Articles - A major shift in the UK’s approach to retirement income

“Moving from a triple to a double lock would be a significant change in how the State Pension evolves over time. While pensioners would retain important protection against rising prices, removing the earnings element could create an increasing gap between the State Pension and working-age incomes over the longer term. That matters not only to existing pensioners, but to millions of people planning for retirement who expect the State Pension to form a meaningful part of their future income.

 

“The politics are equally challenging and if the reaction to the removal of the Winter Fuel Payment was anything to go by, reforming the triple lock risks being political kryptonite. The question will be whether linking the savings to improved social care can make reform more acceptable and avoid pressure for a policy U-turn.

 

“For pension schemes, this reinforces the importance of helping members understand how changes to the State Pension could affect their retirement plans. Schemes should consider how any reform could affect members’ projected retirement income and ensure their communications and planning tools clearly explain the relationship between State and workplace pensions. For some members, a less generous State Pension over the longer term could mean needing to save more privately to achieve the retirement income they are targeting.”