State pensioners have been urged to check their retirement savings following Prime Minister Andy Burnham's announcement about changes to the Triple Lock. In a speech at the Labour Party conference on Tuesday (September 29), Burnham revealed plans for the state pension to rise with inflation or 2.5% from 2030, a change from the current policy of also reflecting average earnings when that is the highest measure.
Funding the National Care Service
Burnham said the savings generated would help fund his plan for a National Care Service to ease the financial strain many older people face in later life. He made clear that the 2024 manifesto commitment to keep the triple lock in place throughout the current Parliament would be honoured. Officials insisted that the state pension will rise by more than the proposed two-lock measure in some years, if needed, to ensure it holds its value relative to earnings.
Responding to the PM's comments, Angela Davis, Chartered Financial Planner at Hymans Robertson Personal Wealth, said the announcement about proposed changes to the triple lock, "alongside the current review of minimum state pension age, it is more important than ever that people ensure that they’re saving adequately for their retirement".
Expert advice on saving
Davis added: "If the state pension doesn’t keep pace with inflation in future, people will need to fall back on their savings, including personal pensions, to make up any shortfall." She noted that if someone retires before state pension age, or if it is increased further, they would need to fund that period themselves.
She said it is now a "good time for people to look at how much of their salary they’re contributing monthly into a pension arrangement and whether it’s affordable to increase this". Davis also advised that self-employed people should make sure they are regularly saving for retirement.
Financial impact and political response
The Institute for Fiscal Studies’ deputy director, Jonathan Cribb, warned that savings "are likely to be relatively small in the first few years, but rise substantially over time" and "we should not expect this reform to save enough that it could fund universal social care in the next parliament".
Speaking to broadcasters on Tuesday evening, Culture Secretary Lisa Nandy said changing the triple lock was "not without political pain" but appeared to acknowledge tax hikes could be needed to cover some costs. Asked if the Government’s social care plan could require extra taxation, she told LBC: "It could require additional funding.
"But the first step, and it’s a bold step, it is a one that is not without political pain, is Andy’s decision to after the next election adjust the triple lock, which will we think free up around £15 billion a year by the end of the 2030s." She called this a "significant investment" into an area that has been "neglected really shamefully by successive governments for generations".
Officials expect the change to save £15 billion a year by 2040.
