Experts are warning the state pension “won’t be enough for a comfortable retirement” following the confirmation of next year’s rate hike.
State pension payments are set to be awarded an 8.5 percent rate boost in 2024 as per the triple lock.
This is a promise by the Government to raise retirement payments annually based on either the rate of inflation, average earnings or at least by 2.5 percent; whichever is higher.
Due to average wages, including bonuses, hitting 8.5 percent last month, pensioners are in line for a sizable payment rise once again following last year’s 10.1 percent hike.
However, financial analysts are sounding the alarm retirees will need to rely on other sources of income outside of the state pension to make ends meet.
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Calculations carried out by interactive investor, based on the PLSA retirement living standards, revealed that the expected state pension in April 2024 still falls £2,642 short of the amount needed for a basic retirement income.
If the triple lock pledge is adhered to, the full new state pension is expected to hit £11,501 next year.
Based on PLSA retirement standards, the amount needed for a basic income in retirement is £14,143.
As it stands, the current full new state pension comes to £10,600 which means the shortfall is currently £3,500.
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Alice Guy, the head of Pensions and Savings at interactive investor, broke down what is at stake for those approaching retirement.
She explained: “The state pension rise is great news for millions of pensioners and will make it easier for them to pay the bills in a time of soaring inflation.
“But for the millions of pensioners who rely on the state pension alone, the rise won’t be enough to provide even a basic standard of living in retirement.
“Before 2012, it wasn’t compulsory for all employers to offer a workplace pension. That means many of today’s pensioners don’t have any income apart from the state pension and rely heavily on state pension rises to keep their finances afloat.”
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The savings expert highlighted a disparity in the level of pensioner poverty between men and women.
Ms Guy added: “Our research in our recent report, Show Me My Money, shows that 28 percent of over 55s expect the state pension to be their only source of income in retirement.
“And millions of older pensioners receive much less than the headline state pension figures as the higher “new state pension” was only introduced in 2016.
“It’s important for those still working to save into a workplace or private pension to supplement the state pension as the state pension alone won’t be enough for a comfortable retirement.”
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