‘Only a matter of time’ until state pension triple lock is scrapped

Pensions: Currie analyses Sunak's decision to protect triple lock

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Many older Britons will be celebrating the return of the triple lock this year, following its temporary suspension in 2022. The policy sees the state pension rise each year by whichever is the highest of 2.5 percent, inflation or average earnings.

However, while the triple lock has been confirmed with a 10.1 percent rise from April 2023, its future, and that of pensions more widely could be on more unsteady ground.

Express.co.uk spoke exclusively to Peter Cranwell, independent financial adviser at Purely Pensions, who offered his insight into how the matter could be addressed in future.

While the return of the triple lock this April is likely to provide comfort to many pensioners, Mr Cranwell suggested people are “beginning to worry” about their pensions.

The Spring Budget is likely to hold many of the answers people are looking for.

Mr Cranwell said: “The Department for Work and Pensions puts the total cost for the state pension in 2021-22 at £104.86billion, an increase from £69.83billion in 2010, when the triple lock was introduced.

“Clearly costs have to be managed and it seems only a matter of time until it is scrapped.

“This is especially considering the fact that the current commitment only lasts until the end of the parliamentary term in 2024.

“But the fall-out for doing so would be severe and the current Government cannot politically afford to do so in its March statement.”

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With the triple lock therefore seemingly safe for the meantime, the Government will be looking for other ways to recoup costs.

Consequently, the pensions space is unlikely to be completely safe from being targeted, the expert warned.

He continued: “Hunt is liable to use other roundabout means of plugging the fiscal gap that may be to the detriment of people’s pensions income. 

“These include increasing the state pension age and reducing the tax relief on their contributions. 

“This will likely focus on higher earners, as doing so for everyone would inevitably make saving for retirement less attractive.”

However, many people aged 45 to 70 could take action in order to boost their income in retirement.

They will only have a matter of months to act, unless they want to miss out on what could be a potential sizeable form of help.

Mr Cranwell explained: “People aged 45 to 70 who still have incomplete contributions for their state pension, such as those working abroad, still have an opportunity to buy these missing years back. 

“They can recoup 16 years’ worth of contributions until April 5, compared to six years after that date.

“People would do well to take advantage of this while they still can especially with the uncertainty that lies ahead.

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“They should seek advice to help them do so in the most cost-effective, tax-efficient way possible.”

Recently, former pensions minister and LCP partner Sir Steve Webb highlighted the potential benefits of voluntary contributions.

He suggested someone with 10 missing years could pay out a little over £8,000 to fix the problem but could get back £55,000 in enhanced state pension payments over a 20 year retirement.

However, he also stressed people should check with the DWP before making voluntary contributions, as they will not always boost a state pension.

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