When this has been done, savers can then take tangible, albeit difficult, actions:
Dedicating money to any element of life may be difficult at the moment but Andrew stressed the long term benefits of funding a retirement effectively: “Where possible, consumers should look to maximise their contributions to their workplace pension scheme. Doing so, in essence, grants employees’ ‘free money’, as their employer matches whatever contribution they decide to make; employees can also take advantage of up to 20 percent tax relief, which is also added to their pension pot.
“Admittedly, this means a larger financial commitment, and given the current financial uncertainty surrounding the pandemic and employment prospect, some people will naturally be more concerned about their cash flow. However, even increasing contributions by a small amount will go a long way in achieving a more financially secure retirement.”
While the insight provided thus far is focused on private pension arrangements, Andrew also commented on some of the systematic issues the UK financial system is grappling with.
This started with analysis of the often controversial triple lock:
The future of the state pension
Unfortunately, despite recent declarations from the government, Andrew felt it may not last in the long term: “It is extremely hard to imagine that the current (or a future) government would scrap the state pension altogether. Millions of retirees depend on the state pension; to take it away from them would cause public and political uproar.
“That said, the much vaunted ‘Triple Lock’ introduced by David Cameron’s government and enshrined within the Conservative Party Manifesto is rumoured to be under review by current Chancellor, Rishi Sunak. The ‘Triple Lock’ guarantees an annual increase of the state pension by the greater of 2.5 percent, RPI and wages inflation. This is an extraordinarily expensive guarantee and with a government desperate to find some way of paying for the staggering high cost of COVID-19, it would be no surprise it the ‘Triple Lock’ was suspended and even removed.
“Nor can we ignore the fact that retirees are living longer, which is inevitably costing the government more and more each year, it seems likely that the state pension age could rise further over the coming decades. Additionally, the minimum age consumers can access their individual pensions rises to 57 in 2020. The consumer will be squeezed from every direction, this of course, will impact many consumers’ retirement strategies.”