Pensioners to get income boost thanks to inflation | Old Mutual Wealth
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Pensioners to get income boost thanks to inflation

17/10/2017

If you’re covering today’s inflation numbers, please see the following comment from Ian Browne, retirement planning expert at Old Mutual Wealth

Ian Browne“September’s inflation of 3% is solid news for pensioners as it sets the rate for the 2018/19 tax year. The new inflation rate will see the flat-rate state pension rise by £4.78 a week. Although a modest increase, in an environment where pay growth lags inflation pensioner incomes will keep pace with prices while the working age population feel the squeeze.

“The pension triple-lock - which the Conservatives were forced to retain as part of their power-broking agreement with the DUP - ‘locks-in’  a minimum 2.5% annual increase to the state pension. But the triple-layered protection means the state pension rises in line with inflation or wages if either of those are higher than 2.5%.

“The cost of the state pension is over £100bn a year and the triple-lock means that cost is set to increase over the long-term. It is estimated it will cost around 6% of GDP by 2050, according to Pensions Policy Institute research. The Conservatives had promised to remove the 2.5% minimum and retain a ‘double-lock’ of inflation and earnings.

“Interestingly, keeping the triple-lock is actually fairly painless in the short-term while inflation is above 2.5%, since the double-lock would still see retirement incomes rise above the minimum.

“Removing the guaranteed 2.5% minimum increase would be cheaper over the longer-term, since it removes the ratchet effect when pay and inflation are low. In a Budget that is expected to favour the young, scrapping the triple-lock seems logical. But as the cost-saving is only felt in decades to come it is a tough policy for any Chancellor to ditch.”

For more information contact

Michael GlenisterOld Mutual Wealth020 7778 963807469 144535michael.glenister@omwealth.com
Kathleen GallagherOld Mutual Wealth023 8072 629307990 004932kathleen.gallagher@omwealth.com

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.