Blog: State Pension Update August 2016
In the first of our occasional guest blogs Martin Beazer, Director of Savvy Wealth Management, considers the changes to state pensions. You can also book free appointments for financial advice with Martin, just contact our Money Matters Team on 01443 490650.
The State of our Pensions: State Pension update August 2016
So what has happened?
Pensions have had a massive shake up over the last year or so, with new pension freedoms being introduced so you can now access all of your personal pension (over age 55) and with tax implications of course.
Single tier state pension, which means from 2016, the single tier state pensions for men and women will kick in paying £144 a week.
The introduction of Auto Enrolment, whereby every employer in the UK has to by law, set up, enroll and pay into a suitable work place pension.
The “triple lock” guarantee on state pensions income was introduced in 2010, which meant from 2014, your state pension income increases by the higher of inflation, the increase in average earnings or 2.5%.
So, no sooner have we thought things are looking good and rosy for Pensions and pensioners, that the Triple lock system seems set to disappear in 2020.
Why was it introduced?
The triple lock guarantee was introduced to stop the meaningless increases in pensions like the one we saw in 2000, which was 75 pence per week and to ensure your money keeps pace with the cost of living.
So what’s happening & should I be worried?
Well, right now nothing is happening, but the triple lock system is set to be replaced in 2020 by a double lock system, which will see the 2.5% increase option dropped.
The government is set to save billions per year from future pension spending if this happens.
There may be good news, as in the money that is saved with dropping the 2.5%, could mean that future increases to the state pensions retirement age slows.
There’s never any need to worry about these things, as what will be will be. I just feel that they will continue to attack the state pension as it’s an easy target.
My advice would be to make sure you are maximizing your existing retirement plan, savings and investments to ensure you are receiving a “good return” on the monies invested. Have a good spread of investments and asset types from cash to the stock market and make sure you get these reviewed regularly.
As an independent adviser, we aim to see our clients at least annually to review the performance and risk of the funds that we are investing in. We also send out regular emails and news bulletins to keep you informed.
We cannot control the state pension and the budget, but we can control our financial future by being a little more “savvy” with our investments.
If you would like us to review any of your Pensions, Investments, ISA’s to ensure they are working as hard as possible for you, please get in touch.
Savvy Wealth Management