The continuation of the triple-lock pension policy is looking increasingly doubtful as the Prime Minister Theresa May refuses to confirm or deny that her party will uphold the commitment.
The triple-lock policy has long made a significant difference to pensioners’ lives. Introduced in 2011, the triple-lock sees the basic state pension rise in line with earnings, inflation, or 2.5 per cent – whichever is higher.
Experts say that between 2010 and 2016, the value of the state pension grew by 22.2 per cent, compared to growth in earnings of 7.6 per cent, and growth in inflation of 12.3 per cent over the same period.
All in all, it means that pensioners’ basic income has outgrown wages at more than double the pace.
But changes, highly predicted under a renewed Conservative government, could see the triple-lock knocked down to a “double-lock” – meaning it will with rise with earnings and inflation only.
As a result, the boom pensioners have recently experienced will all but fizzle out, leaving retirees with less to spend at the end of it, and putting a bigger emphasis on the importance of careful retirement planning.
And as life expectancy grows, we’ll need to save more and more to support ourselves comfortably through retirement, without having to worry about all-important care bills.
So, what can you do?
Fortunately, the auto-enrolment scheme has lent a massive hand to employed pension savers. But those who are self-employed, or run their own business, will need to make provisions themselves.
Consider setting up a tax-free ISA and contributing to it diligently each month. Saving yourself requires more effort than someone saving for you, so force yourself into the right routine early. Don’t forget that pension contributions benefit from tax relief, too.
Our specialist team at JW Hinks have many years’ experience in helping individuals devise comprehensive plans for their future.