State Pension Alarms
Filed in: Pensions
17 December 2021
Inflation in the UK has reached a 10-year high with the Consumer Price Index (CPI) jumping 5.1% in the 12 months to November 2021. This may mean the government could come under pressure to reconsider the pension increase for April 2022, many commentators fear.
Coupled with this fear is the fact that the promised 'Pension Triple Lock' has already been tampered with.
A double whammy pension cost increase
In September 2021 the government took the opportunity to confirm that the earnings element of the pensions triple lock will be removed for 2022/23. Additionally and shortly after this announcement, Boris Johnson also took to the despatch box to confirm that his government plans to increase National Insurance contributions by a further 1.25%.
The UK Government Have Already Broken The "Triple Lock"
With inflation at 5.1% and forecast to grow even more in the next few months, commentators believe the government should reconsider pension increases.
Retirees are set to experience a “real cut in living standards of 2%” and for those receiving a company pension they might face an even bigger cut as not all schemes are protected against inflation as a result up to 12 million pensioners could face a significant squeeze on their living standards next year.
Not only will state pension payments fall in real terms, but income from private pensions will be squeezed, and inflation will eat away at the value of savings held by pensioners in cash and bank accounts. The government has shown that it can change Universal Credit rates at short notice when it wants to, and it will now come under pressure to re-think the modest state pension increase it had planned for April 2022.
How can expatriates best plan for retirement?
For expatriates planning to rely upon UK State pension benefits it is becoming clear and evident that such a strategy is extremely dangerous if a quality lifestyle is expected in retirement.
Increasing Independent savings and provisions is becoming ever more important and should be a major priority to help combat the combined insidious effects of inflation and governmental cut backs.
Talk with us about the options that exist for your circumstances and plan for a headache-free retirement.
Further reading :
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