The triple lock guarantees the state pension rises each April by the highest out of inflation (using the previous September inflation figure), wages (average growth between May and July) or 2.5%
Labour secured a landslide victory in the race for Number 10 – but what does this mean for your state pension and retirement?
Current and future retirees will be wondering if the triple lock will be kept in place – and the good news is, Labour has indeed confirmed it intends to keep this measure. The triple lock guarantees the state pension rises each April by the highest out of inflation (using the previous September inflation figure), wages (average growth between May and July) or 2.5% – whichever is highest.
However, many pensioners still face paying more tax as the full new state pension is set to hit almost £12,000 next year, which is not far off the current £12,570 tax-free personal allowance. Labour has dropped a plan to reintroduce a cap on how much people are allowed to save into their pensions before paying tax.
The pensions lifetime allowance was scrapped in April and saw pension pots worth over £1.07million face an annual tax of £40,000 on average. Labour has also promised that the ability to take 25% of your pension as a tax-free lump sum at retirement is “a permanent feature of the tax system” that it is “not planning to change”.
But Labour has pledged to “review the current state of the pensions and retirement savings landscape” with an emphasis on consolidation and scale to deliver better returns for savers, but we don’t know yet exactly what this will mean just yet.
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said: “The government has already promised a review of the pension landscape which could include pensions tax. Labour’s recent decision to step back from reintroducing the lifetime allowance was welcomed and brought much needed simplification, but more needs to be done. An overarching review needs to look at the system as a whole and make sure people are properly incentivised to save into their SIPPs, ISAs and investments without fear of being tripped up by tax changes further down the line.“
