State pension: Rishi Sunak urged to ‘protect retirement’ as triple lock frozen – ‘review!’

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The state pension is a vital source of income, and thus it is usually protected by the triple lock mechanism, a policy brought about to ensure real-terms increases for retired people. The state pension triple lock guarantees the sum will increase by the highest of average earnings, inflation or 2.5 percent. However, amid the freezing of the mechanism, concerns have been expressed. With the Chancellor set to deliver his Budget in just two days time, he is being urged to reconsider the approach to the sum to ensure as many people can benefit as possible. 

Maike Currie, investment director at Fidelity International, commented on the matter. 

She said: “The suspension of the triple lock – where the state pension rises each year in-line with whichever is highest: inflation, average wages or 2.5 percent – is by no means a long-term solution. 

“Average wages rising by 8.8 percent this year was a statistical anomaly created by the furlough scheme. 

“A more resilient future strategy is needed with an overall review of the UK’s workplace, state, and personal savings, considering both eligibility for automatic enrolment and how the coverage and quantum of contributions might increase in the future.”

The announcement on the state pension triple lock is to mark the first time in a decade the state pension has not increased in lie with the mechanism.

The Government made the decision to suspend the earnings element due in part to warped data brought about by the pandemic.

As numbers of those in work surged, so too did average wages, reaching a staggering 8.8 percent – which made many pensioners hopeful of a substantial rise.

However, the Government has communicated it wishes to be fair to both pensioners and taxpayers, hence the temporary change to the policy. 

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At the time, Tom Selby, head of investment at AJ Bell, said: “Since its introduction in 2011/12 the state pension triple-lock has dramatically boosted retirement incomes for millions of people.

“However, in 2022/23 the state pension will rise in line with the highest of inflation or 2.5 percent only, with CPI for September historically the figure used.

“This will therefore confirm just how much the Government’s decision to axe the earnings element of the policy will cost retirees.”

The state pension triple lock, however, is not the only area of concern for certain experts when it comes to pensions and retirement.

In fact, there may be other factors which cause individuals to face challenges in later life. 

Ms Currie also expressed concerns about the gender pension gap and its implications for women in the UK.

The gender pension gap is the percentage difference in pension savings for women compared to men.

It is brought about by numerous factors, however, often attributed to the gender pay gap which sees women, on average, paid less than their male counterparts.

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Ms Currie added: “While most lockdown restrictions have come to an end, the repercussions of women’s experiences over the last 18 months may reverberate long into the future. 

“Due to the structure of the labour market, and the burden of childcare, many women lost jobs, productivity and the opportunity for promotion and progression during the pandemic. 

“This needs to be addressed. Reviewing rules around employers continuing to pay contributions at pre-maternity rates while on maternity leave, or missed contributions being backfilled by employers once a woman returns to work, could be policy game-changers.”

The Department for Work and Pensions previously told Express.co.uk: “We have carefully considered the fairest approach for both pensioners and younger taxpayers – our legislation strikes that balance while also ensuring pensioner incomes still receive a significant boost.

“This is a one-year response to exceptional circumstances and we plan to return the earnings element of the Triple Lock next year.”

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