What did the Chancellor’s Autumn statement mean for pension planners?

The build-up to yesterday’s Autumn financial statement felt different to previous years. The stakes were incredibly high following Liz Truss’s disastrous tenancy at No.10, which included the economy-crashing mini-budget.

And just the day before the Statement, it was announced that inflation has reached a 41-year high of 11.1%, reminding all there was little room for error.

In his statement, Chancellor Jeremy Hunt unveiled £55bn of tax rises and spending cuts deemed necessary for tackling a 41-year high inflation rate, alongside further cost of living help.

Millions of savers and pensioners that have seen their retirement plans threatened or upended will likely have been watching with anticipation of crucial economic support. So, the commitment to keeping the triple lock will come as a sigh of relief.

However, the cost-of-living crisis continues to rise sharply, hitting individuals and households hard and making retirement planning an increasingly challenging activity, raising the question – did the budget go far enough for pension planners?

Triple lock reinstated

Hunt concluded his statement with the reinstatement of the triple lock on state pension – the most significant and only notable pensions policy included in the budget.

Last year, now Prime Minister Rishi Sunak scrapped the triple lock leaving pensioners with a 3.1% increase in April. Renewed commitment to the 2019 Conservative manifesto pledge means that state pension will rise to £203.85 per week, in line with the 10.1% inflation figure seen in September.

The government also announced that Pension Credit will increase by 10.1% to protect the poorest retirees, alongside an additional £300 cost of living support payment for low-income pensioner households to help with bills.

Indeed, pensioners are disproportionally affected by the effects of rising costs, so the government’s renewed commitment to the triple lock and support packages will come as a relief to millions. However, with inflation set to remain in double figures for the foreseeable future and the energy price cap up for review in April, there remains very little breathing space. 67% of Britons aged 55 and over are avoiding turning on their heating, whilst almost a fifth (18%) are planning to reduce the number of meals they eat, according to My Pension Expert’s research.

The budget will not stretch far enough to support the most vulnerable when food and energy prices are increasing at their fastest rates in decades, pushing the UK toward a record drop in living standards.

Meanwhile, Hunt’s mentioning of an upcoming review of the state pension age will further increase uncertainty among people planning for retirement.

As such, the government should not assume that committing to the triple lock is enough to provide financial security. They must go further and ensure the correct mechanisms are in place to support pensioners with their financial literacy – and indeed, their financial decisions.

Long-term support

Granting access to advice will be vital in helping pensioners take steps to restore confidence in their financial future; only then will we only find a long-term solution to the UK’s pension poverty problem.

At My Pension Expert, we’ve always advocated for steps to simplify the pensions sector and increase access to independent financial advice, which is key to a financially secure retirement.

After all, at turbulent times like these, it is important that pension planners engage with independent financial advisers to create robust, informed financial strategies.

Therefore, the government needs to do more to communicate the advantages of advice and make it easier for Britons to access it. Working alongside regulatory bodies within the financial services sector to better educate Britons on the relevance of advice and how to find reputable and regulated advisors, the Government could go a long way towards bridging the advice gap that is preventing millions from achieving a financially secure retirement. Doing so would be an incredibly positive and simple step towards ensuring that Britons understand the complexities of their pension, ensuring that they take appropriate action to avoid pension poverty.

Once again, failing to acknowledge and engage with the UK’s advice gap is a disappointing sidestep from an issue that urgently needs addressing. Only when the government stops turning a blind eye to the issue can Britons be put in a position to access tailored advice that suits their specific needs and puts them on track to a secure and comfortable retirement.