Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group said: “The Chancellor confirmed at the Budget that the state pension will rise by 4.1%, or £473 a year from April, but as inflation rises above the Bank of England’s 2% target pensioners will see less of a boost in real terms. If inflation stays around the 2.3% mark, the real boost for pensioners will be 1.8% - with inflation at target, they would be 2.1% better off. Stubborn inflation is also likely to slow down any further interest rate decreases, which could hit pensioners with debt or housing costs while potentially helping those with savings. This winter’s price rises are likely to be heavily driven by rising energy costs – it looks likely there will be another energy price cap increase in January. Next winter, as with this one, there will no longer be a universal winter fuel allowance. If energy prices rise similarly in 2025, they could further reduce the benefit of the triple lock increase. Pensioners on lower incomes and most dependent on the state pension for income are likely to feel the greatest impact of this – we would urge anyone of state pension age and on a low income to check their eligibility for pension credit on the government’s online Pension Credit calculator.”
Lily Megson, Policy Director at My Pension Expert, said: “This latest rise to back above target levels is a timely reminder that we’re not yet out of the woods when it comes to economic stability. Whether this is a reactionary spike, or the start of a more sustained, upward inflationary trend remains to be seen. Either way, it reinforces the need for caution in financial planning. For those preparing for retirement, it’s important to stay focused on long-term financial goals and regularly review pension and investment strategies. Exploring options like diversified portfolios or alternative pension products could help ensure that savings continue to work as effectively as possible, even in the face of rising costs. Drastic changes are rarely the answer, but small, informed adjustments can make a significant difference. Savers should remain vigilant and seek professional financial advice. That way, they can build resilience against future fluctuations, keeping their retirement plans on track no matter what fiscal challenges lie ahead.”
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