State pension triple lock ‘drains’ UK finances as Britons warned sum won’t be ‘enough’ | Personal Finance | Finance

The state pension triple lock continues to be a well-liked policy as it ensures the sum keeps pace with the cost of living. Under the triple lock, the state pension will increase each year by whichever is the highest of 2.5 percent, inflation or average earnings.

When the policy makes its return in April 2023 after a one year double lock, the increase will be 10.1 percent in line with September 2022’s CPI inflation figure.

However, there have been debates on whether the triple lock is a sustainable policy, and what steps the Government could take next.

Alice Haine, personal finance analyst at Bestinvest, acknowledged the triple lock as a popular policy.

The expert said the state pension continues to be “valuable”, but also called into question the longevity of the triple lock.

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Ms Haine floated one potential solution – the increase of the state pension age quicker than planned.

Citing an LCP study, the expert said if the state pension age rose to 68 just one year earlier than planned, the Treasury could save approximately £10billion.

However, this may not be a popular move amongst Britons who are already restless about retirement.

She added: “Increasing the state pension age comes with political risk, particularly for a Conservative Government struggling in the popularity stakes.  

“There may be similar concerns over abandoning the triple lock – a Conservative Party commitment that would attract huge criticism if they ditched it before the next election. 

“Ultimately, while the Government could benefit from either increasing the state pension age at an earlier juncture or tweaking of abandoning the triple lock – they may be wary of making a finite decision now and instead defer any concrete decision until after the next election.”

Bearing the volatility of the future in mind, Chris Eastwood, CEO and co-founder at Penfold, told it is important for Britons to take action.

He explained: “Relying on state pension alone is unlikely to be enough for most people to maintain their lifestyle in retirement. 

“The pension triple lock is a key part of protecting the UK’s retirees and reducing pension poverty, which is already a growing problem. 

“We would be deeply concerned to see this removed, especially with the current cost of living crisis, but given the situation the Government faces, we wouldn’t be surprised to see this scrapped – it’s been threatened often!”

As a result, he stressed those who are still working will need to “anticipate and plan” for the retirement they are hoping for.

This is particularly the case given the rising state pension age, which could see retirement become further off for increasing numbers of Britons.

Mr Eastwood added: “Start preparing for retirement as early as possible, which might seem hard at the moment.

“However, by investing little and often and keeping track of workplace pensions, it can make a big difference to the final pot.”

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