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Predictions for ‘less generous’ state pension emphasise need for planning

Jones Sheridan clients may have seen recently quoted research in the national press regarding a less-than-rosy future for the state pension.

The research, which was carried out by Aegon, predicted that more change was on the way for the state pension, with 96% of the two hundred advisers surveyed believing that the state pension would look very different in 30 years time.

When asked about the specific changes that they saw coming for the state pension, 41% felt that it would move away from the current ‘triple lock’ system, which guarantees that the state pension will increase each year in line with inflation, wage growth or 2.5%, whichever is greater. Any move away from the triple lock would essentially see a state pension that is less generous than the current system.

Other changes that advisers felt could be introduced, which would again see the state pension become less generous, included a return to a means tested state pension (31%) and an increase in the state pension age (49%).

The figures in the Aegon research show yet again just how important having a financial plan can be to individuals in retirement. Whilst those of us who are closer to retirement age will be able to look at what state pensions we will receive with some certainty, those who are further off will face all sorts of uncertain change before they reach pension age. Coupled with the fact that the state pension will not be enough to fund many of our retirements, a level of independent saving and planning is the only way to work towards a bit of certainty in your retirement.

If you know of anyone who is not currently planning for their retirement in this way, and may be relying on the state pension in the future if they continue, then do send them our way! We’ll be happy to have an initial discussion with them about their plans and how we might be able to help them to prepare for a better retirement.