The ONS has published the latest UK Labour Market data: Labour market overview, UK - Office for National Statistics
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “Average wage growth plus bonuses stood at 4.1% between April-June. This could prove to be an interesting figure for state pensioners as next month’s data is a key part of the formula for the state pension triple lock.
The triple lock aims to increase the state pension by whichever is highest of average wages (May-July), September’s CPI inflation or 2.5%. With inflation standing at 2.6%, this suggests, barring a shock inflation spike over the next couple of months or collapse in average wage growth, that wages will be the element used.
Should next month’s figure remain the same as today’s, this would put someone on a full new state pension on around £251.20 per week, up from £241.30 per week. Someone on a full basic state pension would see their weekly amount rise from £184.90 per week to around £192.50 from next April.
While an inflation-busting increase will be good news for pensioners, the fact remains that the state pension on its own does little more than cover the essentials. If you want more from your retirement, then you need to make the most of your workplace and personal pensions.
Auto-enrolment has done a great job in recent years in getting more people saving into a pension. However, for many, saving at auto-enrolment minimums will not enable them to maintain their lifestyle in retirement. To prevent a nasty shock, it pays to consider what you want your retirement to look like and then you can calculate how much it might cost. A nice retirement means different things for different people – some may want to travel the world; others may want to stick closer to home but spend more time with family and friends.
Make use of online tools from your pension provider, such as online calculators. These can tell you how much you are on track to receive. If you aren’t quite where you want to be, you can also model the impact of increasing your contributions over time. Taking small steps, such as increasing your contributions every time you receive a pay rise, can make a huge difference. You can also make the most of employer contributions. Many businesses contribute at auto-enrolment minimum levels, but others contribute more if you do – the so-called ‘employer match’. If you’ve got the extra cash, then the extra boost from your employer can make all the difference to your lifestyle in retirement.”
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