The ‘triple lock’ principle of pension protection may be safe for now, but will it always be?
Triple lock is the principle that dictates the value of your state pension. As things currently stand, your state pension will rise based on the rate of inflation, the rate of average earnings, or a flat rate of 2.5% - whichever is the highest. Recent calls to scrap it by former pensions minister, Baroness Altmann have so far been thwarted but is it only a matter of time before problems of affordability force the government to re-think its approach?
Protagonists of those who want the ‘triple lock’ scrapped argue that it will cost the country billions to uphold and in a post-Brexit world where it may take a while to build trade relationships with Europe and the rest of the world, tax revenues are likely to fall, making the funding of ‘triple lock’ even more problematical.
Clearly it would be politically very unpopular for ‘triple lock’ to be removed and with a new PM in place, and elections fairly close on the horizon, this is not a decision that the government will be rushing to make. However, if the Conservative government is re-elected, it remains to be seen if ‘triple lock’ is going to be sustainable.
Strain on the country’s finances
The preference of Baroness Altmann is to introduce a double lock whereby you increase state pension in line with prices or with earnings. It is the 2.5% which is potentially the fly in the ointment. If prices and earnings both fall, then putting pensions up by 2.5% will put a great strain on the country’s finances and a double lock would save the UK billions in the long-term.
With the returns on bonds, equities, stocks and shares underperforming and the long-term sustainability of triple lock being debatable, pensioners and those nearing retirement are starting to turn to property to supplement their retiremet incomes.
For those nearing retirement there is the unwelcome prospect of either having to work longer to build a decent income to retire with or simply accept that they will have a lower standard of living once they retire. However, with the pensions reforms allowing you to access your retirement pot early, many pensioners are now looking at property as a way of funding their retirement.
Property investing to fund retirement
Property investment has been outperforming traditional forms of investment for a long time now. The ongoing supply and demand issue in the UK for affordable housing means that there is a ready supply of tenants waiting to rent and if you choose your property investment wisely, you can enjoy the prospect of regular rental income.
Of course there are risks, but with investment opportunities such as student property and prime city centre residential developments offering hassle-free, hands-off and relatively safe investments, it’s little wonder that pensioners are starting to turn towards property to fund their retirements.
To find out more how property investment can give you the retirement income you want, contact us now on 0333 3001 888.