With Brexit dominating proceedings and sucking the oxygen out of all other political debate, it’s easy to miss some other key news items developing within the Palace of Westminster.
For those who will be dependent upon a strong State Pension come retirement, latest non-European-Union-related news from SW1 needs to be filed under ‘essential reading’.
Late last week, a House of Lords committee published a report recommending the scrapping of the so-called triple lock, a mechanism which dictates the minimum amount by which pensioner benefits should be raised each year. This means that the State Pension will rise by at least the rate of inflation, by the rate of wage growth, or by 2.5%.
According to the Select Committee on Intergenerational Fairness and Provision, “the triple lock for the State Pension should be removed” and “should be uprated in line with average earnings to ensure parity with working people.”
Benefits to be bashed?
The possibility of lower-than-expected pension rises is not the only thing for Britons to worry about, though. The committee also recommended that certain age-related benefits should be removed, such as the free television licence given to those aged 75 and over, while items like free bus passes and winter fuel payments should be dished out no sooner than five years after the State Pension age comes into effect, it advised.
To crown things off, the group of peers recommended that those above the State Pension age should also be made to pay National Insurance contributions.
The wealth gap between the old and young is becoming an increasingly hot political potato, with concerns over items like Millennials’ high debt levels and their lack of access to affordable housing reaching fever pitch.
As Professor James Sefton of Imperial College told the committee last November: “Because of demographic ageing, it seems that current tax and spending plans are unsustainable and will have to be rebalanced. Otherwise, current unborns will inherit… a large government debt from the older generations.”
The outlook for the State Pension is becoming more and more troubling and threatens to leave millions of us in severe financial trouble in our autumn years.
The age at which you can claim the benefit is getting further and further away for millions of us, and the news last week concerning the triple lock adds fuel to existing claims that the State Pension — which at the moment only pays a paltry £168.60 under new rules — will hardly be worth claiming for once we finally become eligible.
It’s abundantly clear that Britons need to insulate themselves from poverty in retirement. The sooner you grab the bull by the horns the better, of course, but it’s never too late to start.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.