The state pension will rise by 4.1% from next month, but experts have warned that a review of the triple lock is now “inevitable” as new Department for Work and Pensions figures are released
A review of the triple lock system now seems “inevitable” as fresh data from the Department for Work and Pensions (DWP) comes to light. With a 4.1% hike in payments starting next month, the full new state pension will jump from £221.20 a week to £230.25 a week, marking an annual increase of £470.
Thomas Lambert, a financial planner at Quilter, issued a stark warning to the UK’s 13 million state pensioners: “A far smaller percentage of pensioners received income related benefits in 2024, sitting at 20%, down from 31% in 2010 and 37% in 1995.”
He pointed out that this decline underscores the effect of rising incomes from both the state pension and private pensions, which has led to fewer people being eligible for benefits. He noted that single pensioners were particularly dependent on this state support to boost their pension income.
Lambert further commented: “As the coming generations move into retirement and the age of defined benefit schemes comes to an end, it is likely to reveal a significant gap in retirement provision and pensioner incomes may decline as a result. We appear to be nearing a juncture where there will soon be an inevitable review of the triple lock.”
He suggested a potential reform to the triple lock could involve tying increases to earnings, with a temporary CPI indexation when inflation surpasses wage growth but generally aligning with long-term wage increases. This would help synchronise pension growth with the broader economy and establish a more predictable and affordable system, he added, reports Birmingham Live.
“However, any change must be handled carefully. The state pension is the single largest area of welfare spending and a vital source of income for millions.”
PensionBee UK’s chief business officer, Lisa Picardo, expressed her disappointment that pensions were overlooked in the Spring Statement.
She voiced her concern, saying, “While there are a lot of important issues being addressed, there is growing evidence that millions of Britons are simply not saving enough for retirement, and the government has chosen to overlook potential ‘quick-win’ reforms that would signal the importance and actively help individuals build long-term financial security,”.
Picardo went on to outline PensionBee’s proposals: “Our suggestions – including implementing a 10-day pension transfer switch guarantee, accelerating progress on auto-enrolment expansion and adopting a universal rate of tax relief – are all crucial steps towards a fairer pension system that encourages better engagement and investing to achieve better retirement outcomes.”
She warned about the implications of the government’s stance, stating, “As the first statement from a new government, it potentially sets a worrying tone for the years ahead – suggesting that these types of pension reform are not a priority. We cannot afford to keep kicking the can down the road when it comes to pension reform. Every year of inaction risks leaving more people financially vulnerable in later life.
“While we welcome discussions around the future of pension policy, we need decisive action, not just words. If we are serious about ensuring financial resilience for future generations, then the government must prioritise these long-overdue reforms.”
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