Five Minute Finance: UK State Pension Triple Lock to be Scrapped?
Written by Ciaran McDiamond – deVere Acuma
Every year the UK state pension increases in value by either 2.5 per cent, the rate of inflation, or average earnings growth – whichever is largest.
This system is known as the ‘triple lock’ and is in place to ensure that people receiving the UK state pension are able to enjoy stable purchasing power throughout retirement.
The system was introduced as part of the Pensions Act 2007 under Tony Blair’s Labour government.
The full state pension is currently £134.25 per week.
Why is it in the news?
The ‘triple lock’ system has hit the headlines recently, following reports that the government are exploring cost-saving options in light of the Coronavirus crisis.
Reports began circulating when leaked Treasury documents revealed that ending the triple lock system could be part of the governments post-COVID cost-saving initiative.
Who is affected?
Anyone who is currently or is on the verge of claiming the UK state pension could be affected.
It remains to be seen if the government are serious about implementing this strategy, however, if they do, this could have a serious and detrimental impact on all those claiming the UK state pension.
At this stage the removal of the triple lock system is only speculation, however, it is a signal that relying on the UK state pension to provide your retirement income is risky.
The UK state pension may come under threat as part of the UK governments cost-saving measures.
You cannot rely solely on the government to provide you with an income in retirement.
Pension funds are easy targets during times of economic uncertainty.
The state pension can be changed at any time by any government.
Want help achieving financial security in retirement? Click on the link below for help with;
Retirement planning for expats
Reviewing your UK occupational pension
Making overseas UK state pension contributions
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