State pensioners are receiving a 10.1 percent payment increase in April as the triple lock policy has been reinstated. But many analysts have warned the policy may not last for many more years.
The triple lock policy guarantees the state pension increases each year in line with the highest of 2.5 percent, the rise in average earnings or inflation.
The latest figure for inflation in January was 10.1 percent, down from a peak of more than 11 percent in late 2022.
Daniel Harrison, chief executive of True Potential, spoke to Express.co.uk about the future of the triple lock policy
He said: “The current high inflation environment has two relevant impacts. It makes the triple lock much more expensive to maintain and it also increases retirement expenditures.
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Researchers found those who want to retire at age 60 rather than at the upcoming pension age of 68, need an additional £130,000 in retirement savings.
The state pension age is currently 66 for men and women but this will be gradually increased to 67 and then 68 over the coming years.
Those who want to retire at 63 still need an extra £85,000 to pay for their needs before they reach state pension age.
According to PensionBee’s figures, a person with a typical £40,000 saved up by the age of 50 has a shortfall of £153,400 on what they would pay for the whole of their retirement, even with payments from their state pension.
One tip Mr Harrison offered to workers saving up for their retirement is to look at increasing their pension contributions.
Pension contributions have the benefit of avoiding income tax when they are paid in, up to the annual allowance of £40,000 a year.
Some 800,000 Britons will be paying more income tax in the coming fiscal year as the threshold for the highest band is to be lowered from £150,000 to £125,140 in April.
Mr Harrison said those who will see their income tax bill increase in the coming financial year should look at investing in a salary sacrifice arrangement with their employer.
He explained: “This involves asking your employer to increase your pension contribution by lowering your base salary.
“This could mean you enter a lower tax threshold whilst your employer would pay less in National Insurance contributions, creating a win-win for both parties.
“You would also benefit from being able to boost your pension contributions, helping to better prepare yourself for retirement.
“So if you’re going to be affected by the tax changes and are at an age where you’re looking to grow your pension then it’s certainly something to consider.”
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