THE UK Government has announced that intend to shelve the “Triple Lock” on UK state pension from 2020 and return to the “double lock”.
What will that mean for your UK state pension? It means that you will no longer be entitled to a minimum annual rise of 2.5%.
At the moment the Triple Lock promises that state pension will rise each year by the highest of one of three measures: wage growth, inflation or 2.5%.
Introduced by the coalition government in 2010, the lock means the basic state pension is worth £106.8p a year more than it would have been if only a “double lock” – based solely on earnings and prices – had applied.
This could have a huge impact on the standard of living for pensioners who rely on the annual increase, but it does help with one thing, it makes redundant the main question from most pensioners living in Europe regarding the Brexit which was “will the Brexit mean I lose my automatic 2.5% annual increase on my pension” as you will now no longer have such a guarantee.
The UK Government seems hell bent of penalising pensioners as they have also announced changes to how they will fund old age care, they want to use your home in the UK to pay for these costs. At the moment they are trying to backtrack on this, but the fact they announced it in the first place usually means they will eventually do it, or something very similar.
What are they going to target next? Could it be your private pensions, they might decide pensioners who have worked all their lives to have a comfortable retirement are too comfortable and decide to place an extra tax on this income. No one knows.
But what this does mean, now more than ever you need to ensure that the money you have in investments, bank accounts and private or final salary pensions is working for you in a tax efficient way and where possible you have control over how these are managed and invested.
If you would like more information on this or any other financial advice please contact me by email [email protected] or call me on 658 892 330.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
Blacktower Financial Management Ltd is authorised and regulated in the UK by the Financial Conduct Authority and is registered with both the DGS and CNMV. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain.