Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “The chancellor has confirmed that the state pension will rise by an inflation-busting 4.8% in April, driven by the average earnings component of the triple lock. This will offer some short-term relief to those who continue to feel the squeeze of higher living costs, as the new state pension will be boosted by £574.50 per year and the basic state pension by £439.40. Triple lock stays, for now... The commitment to keep the triple lock stays, for now, but there are significant questions around its long-term sustainability. The state pension is funded by the workers of today, and its costs are set to swell over the coming years as more of our ageing population reach state pension age. Any future reforms or changes to the triple lock will need to carefully balance its long-term affordability with the sizable political risks associated with changing a policy affecting millions of people. The state pension age review alongside the revived Pensions Commission, presents a unique opportunity to look at the pension system as a whole, including whether the triple lock continues to serve its intended purpose effectively.”
David Brooks, Head of Policy at leading independent consultancy Broadstone, commented: “Confirmation that the State Pension will increase by 4.8%, around £575 a year for those on the full new State Pension, takes the annual benefit right up to the brink of the frozen Personal Allowance threshold and will drag more retirees into paying Income Tax next year. The outsized increase to the State Pension will once more raise questions around the long-term viability of the Triple Lock given the accelerating cost to the Exchequer. With the State Pension Age review ongoing, it will be interesting to see if it makes any proposals beyond raising the age of receipt either higher or faster. As we head into Winter with the cost-of-living pressures still biting, the news will be reassuring for those pensioners who are largely reliant on the State Pension to provide the majority of their income.”
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