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What to Expect with Triple Lock on State Pensions Review by Prestige Wealth Solution


The Tory government has identified that they will be shelving the triple lock on state pension increased by 2020. But what does this mean for you and your retirement?

The Government is to identify a time on which the promises of the state pension rising each year. The state pension is to rise by the highest of three measures per annum. These measures are inflation, growth or wages.

The triple lock was first introduced in 2010 by the Coalition government, which means that the basic state pension is worth in the region of £106.8p a year more than if they had introduced a double lock instead. This was based on prices and earnings that were applied.

It is the Conservative party that has come forward to honor the triple lock until at least April 2020. This is when the 2.5p underpin will be eliminated. This isn't a surprise and has been expected as inflation continues to rise and is expected to continue its rise well into the future.

An independent review, which was conducted earlier this year and commissioned by the Government actually recommended that the lock be removed without delay. The state pension cost the economy 5.2% of its worth and that is expected to increase to 6.7% by the year 2066. The triple lock being removed could reduce this to 5.9%, which could save the government a good sum of money in the long run.

Removing the wage percentage and relying only on inflation, which is a legal requirement, would result in pensions dropping by £365.56 per year, which means a state pension would be £5,944 per annum instead of £6,360 per year.

The Labor Party has announced that they will protect the triple lock if they are elected in the next parliament.

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