Will the government change the State Pension?

The cost of the State Pension has attracted a lot of focus in recent years as a rapidly ageing population pushes the costs up.

We’ve seen State Pension age increase over the years in a bid to manage this.

However, there are also various other rumours around how sustainable the triple lock is over the long term, and even whether the State Pension could become means-tested in the future.

With the government looking at how to fill a gaping black hole in its finances, it’s highly likely that speculation will start to swirl again as we head towards the Autumn Budget.

This article isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice. Remember, pension and tax rules can change, and any benefits depend on individual circumstances.

Will the State Pension change – what are the main rumours?

Could the State Pension be means-tested?

One concern people have is that the State Pension could be means-tested in future.

However, this approach would cause problems – as evidenced in the recent U-turn in the government’s attempts to restrict winter fuel allowance to those on Pension Credit.

It was a move that left people just a few pounds off qualifying for Pension Credit with a big gap in their budgets.

The government faced huge backlash and has since restored it to pensioners earning below £35,000 per year ahead of this coming winter.

Similarly, attempts to further boost State Pension age could prove increasingly difficult with recent ONS data showing that healthy life expectancy currently sits well below State Pension age.

This means that many people face the very real possibility of not being able to work right up until they receive their State Pension, leaving them with a period of time with a serious gap in their finances.

Could the government tweak the triple lock?

Another option available to the government would be to reform the triple lock.

The triple lock aims to increase the State Pension by whatever is the most of 2.5%, average earnings growth and CPI inflation every year.

It’s an approach that has seen sizeable increases to the State Pension in recent years, drawing the attention of those who believe it’s intergenerationally unfair.

The government has recently committed to retaining the triple lock for the remainder of this Parliament, but in the future we could see attempts to water it down – for instance some kind of double lock – though they would attract stern opposition.

Will you need more than the State Pension?

Whatever happens to the State Pension, it’s likely you’ll need to supplement it with your own retirement savings.

One of the best ways to help boost your retirement pot is to see what your employer can offer you.

Many will contribute at auto-enrolment minimum levels, but others are willing to pay in more.

Some will operate what’s known as a matching contribution, where they’ll boost their contribution if you boost yours.

This can mean a lot more goes into your pension with only a relatively modest uplift from you.

You can use an online pension calculator to see what you might get – if it’s enough then great, but if not you have time to do something about it.

Along with supplementing your State Pension with any workplace pension, it could be worth thinking about using a private pension too, like the HL Self-Invested Personal Pension (SIPP).

Small actions like upping your pension contributions when you get a pay rise or new job is one way to boost your contributions.

The HL SIPP can help.

You’ll get access to a wide range of investments to pick from, including the HL Ready-Made Pension Plan, and a full range of retirement options.

And as well as getting tax relief, your pension can also grow free from UK income and capital gains tax.

Just remember, you also can’t access money in a pension until age 55 (rising to 57 in 2028).