Rishi Sunak grilled by Neil on state pension increases
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The State Pension is made available to individuals who have put forward a set number of National Insurance contributions throughout their lifetime. Many people will have worked for decades to ensure their state pension reaches the full sum as outlined by the Department for Work and Pensions (DWP). At present, the most someone can receive through the basic state pension is £137.60 per week.
This increases slightly to a full sum of £179.60 per week for those on the new state pension.
Of course, though, what people actually receive is based on their National Insurance contributions, and some may not be able to unlock the full amount.
Regardless of what people actually receive from the state pension, there are concerns about whether this form of support is enough to see Britons through their retirement.
Indeed, a recent report undertaken by the Pensions Policy Institute and the Centre for Ageing Better, has revealed the extent of the potential problems.
The report suggested the equivalent of five million people are at risk of missing the level of income they need for retirement.
This can be attributed to a variety factors which impact people at different stages of their lives.
Increases in unemployment, and changes to many workplace pension schemes are key reasons why.
However, the report also found that a low state pension is one of the contributing factors leading to people being left without adequate savings for retirement.
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This is set to be a major cause for concern for individuals who are approaching later years of life.
Anna Dixon, Chief Executive of the Centre for Ageing Better, commented on the matter.
She said: “The low level of the state pension in the UK, at just 24 percent of the national average income means people are unable to rely on the state pension to provide an adequate income in retirement.
“Many people don’t have enough pension savings to support a decent standard of living in retirement.
“Further action is needed to ensure millions of people approaching retirement and generations to follow do not find themselves without adequate income in later life.”
Although Ms Dixon highlighted the benefits of auto-enrolment in encouraging pension saving, she warned this was not enough.
Instead, she called upon the Government as well as employers to take further action.
This could be achieved by assisting Britons in boosting their pension savings for those who are approaching retirement.
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Back in 2018, it was asserted through data compiled by the Organisation for Economic Co-operation and Development that the UK state pension was the poorest in the developed world.
At that time, as a percentage of average earnings, the UK provided 29 percent.
This was comparable to the Netherlands, which topped the table at 100.6 percent, and followed closely behind by Portugal, offering 94 percent.
The average across the OCED was recorded at 62.9 percent.
However, the UK Government does take action when it comes to uprating the state pension every year.
The Triple Lock Mechanism is used to ensure both the basic and the new state pension increase annually.
Under current rules, increases occur based on the highest of three main components: average earnings growth, the rate of inflation or 2.5 percent.
Recently, there were fears about the future of the triple lock due to the forecasted high earnings growth due to COVID-19 recovery.
But Downing Street has denied there are plans to take this manifesto promise off the table.
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