In recent weeks you may have seen a lot in the news about the State Pension triple lock guarantee, but what exactly is the triple lock and what does the future hold for the guarantee? The State Pension triple lock was introduced in 2010 by the coalition government to guarantee that the basic State Pension would increase each year by either:
- Price inflation
- Average earnings
Whichever is the highest of these three factors determines how much pensioners will receive in their annual rise. The guarantee was introduced to help bring pensioner income in line with wages. While this has been beneficial to pensioners, the UK State Pension is still one of the lowest in Europe. At its fullest amount the New State Pension is £159.55, which while an improvement on the basic State Pension which is currently £122.30, it is unlikely to be enough to rely on in your retirement.
If you are at the earlier stages of planning for your retirement it is important that the state pension is not relied upon as in the future it may not exist in the capacity it does today and even if it is still in existence when you reach retirement age, it will likely not be enough for a comfortable life in your later years.
The Future of the Triple Lock Guarantee
While Prime Minister, Theresa May had confirmed that the triple lock will remain until at least 2020, the upcoming snap election could alter those plans and see the guarantee running for longer or being scrapped in favour of a double lock guarantee.
A double lock guarantee would see the State Pension rise year on year in line with either price inflation or average earnings, whichever is highest. Scrapping the 2.5% increase element of the triple lock would be a more cost effective solution for the government.
While the future of the triple lock guarantee is currently unknown and will likely become clearer in the coming months, for now and possibly the next three years at least, the State Pension will continue to increase by at least 2.5% each year.
Pension Planning Advice
If you are looking for independent pension advice in Lincolnshire and the surrounding areas, we can help you find the right pension adviser to help you with all aspects of pension planning and reviewing to ensure you have the most effective and efficient strategies in place.
The financial advisers we recommend are experienced in retirement planning and regularly work with their clients to provide support and guidance on all aspects of pension advice in Lincolnshire and across the East Midlands. Our financial advisers will work with you to determine which pension plan is best suited to your circumstances and will provide sound retirement planning advice.
At Pensions.org we can help you find a registered financial adviser for pension advice in Lincolnshire. All of the financial advisers we recommend offer bespoke financial advice that is tailored to your unique personal circumstances.