State pension warning as triple lock ‘likely to be revised’ at Budget

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As UK inflation recently hit a 41-year high, the Government will be constantly looking for ways to cut this number down. Prime Minister Rishi Sunak said halving inflation by the end of 2023 is one of the Government’s five key pledges.

The state pension triple lock has been reinstated this year, giving pensioners a 10.1 percent boost from April 2023. The increase is expected to cost the Treasury an additional £11billion.

Labelled a “huge financial burden” to the Government, experts believe the triple lock terms will “likely be revised” next month at the Spring Budget in a bid to decrease Government spending.

Simon Dawes, head of wealth management at Cooper Associates Wealth Management, a principal partner practice of St. James’s Place spoke exclusively with about what he expects in the upcoming budget meeting.

When asked about the state pension triple lock, Mr Dawes said: “It is a huge financial burden to the Government and given the current high rates of inflation I would anticipate that the terms are likely to be revised.

“I expect, for example, that the Consumer Price Index element of the triple lock is likely to be capped to prevent periods of high inflation causing this promise to be too expensive to maintain.”

The triple lock guarantee, introduced by the coalition government in 2010, means that state pensions will rise by whichever is the highest of three measures: inflation, earnings growth and 2.5 per cent, so that pensioner incomes keep pace with rising prices.

Last autumn, the Government confirmed the state pension would increase by 10.1 percent from April this year, in line with CPI inflation, bringing it to £203.85 a week.

Rishi Sunak has previously said he “cares very much” about pensioners and their heating bills because they are especially vulnerable to cold weather.

Currently, claimants on the new state pension get a weekly payment of £185.15 once they turn the retirement age of 66.

The full basic state pension is £141.85 per week and is received by those who hit retirement prior to April 6, 2016.

After the rise, the new full new state pension payments will increase to £203.85 a week and the basic state pension will rise to £156.20 a week.

But in a new report on benefits and tax credits, the Institute for Fiscal Studies (IFS) said: “The current policy of increasing the state pension each year may well also cause a significant intergenerational transfer: in the limit, this policy is not sustainable (it implies pensions becoming an ever-increasing share of national income).

“And it is possible that the population currently of working age will not all end up benefiting in full from the same generosity.”

This is primarily due to pensions increasing to take up more and more of the country’s wealth.

Jeremy Hunt will unveil his Spring Budget on Wednesday, March 15 2023.

The state pension age is also something that could be reviewed, and there are reports that any change to the age could be announced in the forthcoming Budget.

At the moment, the age at which people can claim their state pension is 66 for both men and women.

It will gradually increase to 67 by 2028, before going up slowly to 68 between 2044 and 2046.

But the review into the state pension age could recommend that the increase to 68 be speeded up, and come into effect in the mid-2030s.

However, Tom Selby, head of retirement policy at the investment platform AJ Bell, said: “Bringing forward the increase could be a huge money spinner, likely raising tens of billions in revenue.

“On the other hand, telling millions of people they will have to wait longer for their pension might prove the final nail in the coffin of the Conservatives’ hope of winning the next general election.”

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