With speculation mounting on the state pension triple lock, interactive investor comments on the need to preserve the integrity of the state pension, which forms a core part of people’s retirement plans.
Alice Guy, Head of Pensions and Savings, interactive investor says: “A couple retiring today with a full state pension entitlement would currently receive joint state pension income of £21,200 each year. This income is worth more than most people could dream of saving themselves in their pensions, with average workplace pension wealth still too low to provide a decent retirement income.
“The average pension pot for over-55s currently stands at £91,400 for employees and is shockingly low for over-55s who are self-employed or have a disability. The average pension pot for self-employed over 55s is £16,100 and £13,000 for over-55s with long-standing illnesses or disabilities (ONS data on those over 55 with pensions not yet in payment).
“In contrast, pension income of £10,600 would cost £199,000 to buy with a workplace or private pension pot and a couple getting £21,200 would need £398,000 shared between them to buy the same income with a workplace or private pension pot (based on 3% escalating annuity rates from Sharing Pensions for a 65-year-old, £5,325 per £100,000).
“With final salary pensions less common, workers are increasingly reliant on the state pension as defined contribution pensions are not guaranteed and are affected by stock market volatility. Having a guaranteed element to your pension income is extremely valuable and the state pension is the jewel in the crown of our retirement system.
“The triple lock was introduced in 2011 to correct years of falling state pension incomes compared to average wages. It was designed to lift millions of pensioners out of poverty as pensions began to catch up with average wages.
“The state pension is extremely precious to millions of pensioners and the triple lock shouldn’t be tampered with lightly.”
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