Pensions - Articles - Triple Lock confirmation is music to pensioners ears

Broadstone, Standard Life, Hymans Robertson, Aegon and Phoenix Insights comment on Triple Lock confirmation being music to pensioners ears as the Chancellor confirms State Pension will rise by 8.5%

 Simon Kew, Head of Market Engagement at leading independent consultancy, Broadstone said, “For the past few months, pensioners have been on tenterhooks waiting for the Chancellor to announce his decision on the triple lock uprating for next year’s State Pension.
 “Today’s confirmation in the Autumn Statement that the State Pension will increase by 8.5% will be music to their ears.
 “The Chancellor has stuck to the government’s manifesto pledge and avoided the temptation of sneakily cutting the uplift to 7.8% by excluding bonuses from the wage growth figure. It means that the State Pension will rise to around £11,500 from £10,600 boosting pensioner income at a time when cost of living pressures are still squeezing household budgets.
 “For those yet to enter retirement, it is a reminder of the importance of building sufficient pension savings where possible. This will help avoid reliance on a State Pension that is left at the whim of political machinations year after year and inadequate for providing a decent standard of living in retirement on its own.
 “A second successive bumper boost to the State Pension will raise further questions around its long-term affordability, especially given the somewhat precarious state of the nation’s finances.”

 Dean Butler, Managing Director for Retail Direct at Standard Life said: “There will be no fiddling with the triple lock formula this year as the Chancellor confirmed his intention to offer those in receipt of the state pension the full 8.5% due as a result of increases to average earnings. There had been some speculation that we may see a reduced offer of 7.8% to reflect the fact that some of the earnings growth was due to a one off payment to public sector workers.

 “The last couple of years have seen exceptionally large increases applied to the triple lock as a result of inflation and wage growth and questions surrounding the growing cost remain. A proposed review of the state pension was pushed out earlier this year reflecting the highly sensitive nature of the policy this side of an election.”

 Commenting on the Chancellor’s decision to maintain the triple lock in full, Paul Waters, Partner, Hymans Robertson, said: “Now was not the time to tweak the triple lock. The increased income that it provides right now, especially to deal with the high cost of living, will have been desperately needed by pensioners, particularly those on low incomes. The state pension is already relatively low when measured against recommended UK minimum living standards and many European countries. Changes to the triple lock, or the state pension, shouldn’t be made in a piecemeal way. In a period of relatively high inflation and interest rates, financial metrics and benefits shouldn’t be looked at in isolation. Short term decisions like suspending the triple lock aren’t a simple fix to the challenge of managing high levels of public spending and the ageing population. It needs a long-term solution, so, once the state pension is at a more meaningful level for the pensioners relying on it, the mechanism of ensuring fair but affordable increases must be addressed. Deep-rooted reforms that consider the interaction of pension savings, tax, and other benefits including care are needed.”

 Steven Cameron, Pensions Director at Aegon said: “State pensioners will be relieved that the Government has honoured the state pension triple lock in full. This could deliver an increase of over double the ruling inflation rate next April.
 “But this needs to be paid for out of the National Insurance contributions of today’s workers which raises concerns over intergenerational fairness and there is still a huge question mark over whether the triple lock is affordable longer term.
 “We hope all political parties will set out their future policy on the triple lock in their pre-election manifestos. We believe the formula should be adjusted to look at averaging over a 3 year period rather than a three way comparison each year.”


 Phoenix Group’s Patrick Thomson, head of research and policy at Phoenix Insights comments: “State pensioners will welcome news that the government has committed to maintaining the triple lock without adjustments. The triple lock has been an important policy to ensure retirees’ income has kept pace with rising prices or increases in the working population's wages, and today’s announcement means the state pension will rise by 8.5% next April.

 “Decisions around the state pension carry huge significance given the impact on a large proportion of the electorate, so any adjustment to the triple lock could have led to wider political ramifications in the lead up to the next general election.
 “Polling from Phoenix Insights found people of all ages believe the state pension exists to ensure everyone has a minimum level of income in retirement and 82% of adults said it should support older people who are unable to work

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