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Backstage with Keith Richards

13th June 2017

Following last week's General Election, many experts have suggested the result will cast new doubt over critical changes to the state pension.

With the Government's hands tied by Brexit negotiations and no overall majority, it is likely that difficult decisions will be kicked into the long grass.

But in order to avoid an inter-generational savings crisis, the new minority Government cannot afford to delay any longer the much needed reform we need to an unsustainable system.

Figures from the Institute of Fiscal Studies show that in 50 years' time, raising state pensions in line with the triple lock will cost around £17 billion more than raising state pensions in line with earnings.

The Conservative manifesto included a commitment to scrapping the triple lock by 2020, but there is rising speculation that the deal with the Democratic Unionist Party will result in a scaling back of this commitment.

Once again, it appears that meaningful reform is going to fall victim to political maneuvering.

The manifesto also alluded to future rises to state pension ages. After delaying its response to the independent Cridland review of the state pension age last month, we'd urge the Government to deliver certainty by setting out its plans on when and by how much they will increase state pension ages.

As life expectancies continue to rise, thousands will be facing the prospect of severe levels of poverty in later life, unless people are clear about the need to save. The Government owes it to the public to take proactive steps to help people plan ahead to counteract the inevitable reduction in state support.

We would also urge the new Government to give serious consideration to earlier calls for the establishment of an independent pensions commission tasked with encouraging a savings culture in the UK.

We understand that minority government brings with it some significant challenges, and that Brexit will continue to consume government resources in the next couple of years. But without action we are facing a state pension train crash.

It is time for a "strong and stable" government to introduce reforms that address the demographic and economic pressures that are not simply going to go away.

The advice profession will be key in supporting a return to a savings culture and the Personal Finance Society will continue raising awareness and pressing the political agenda.

 

Best Wishes,

Keith

 

About the Blog

In this blog Personal Finance Society CEO Keith Richards will be keeping you up-to-date with all the Personal Finance Society news, projects and initiatives that we have in the works.

Read past editions of the blog »

 

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