By Simon Mayoh, Financial Planning Consultant, Armstrong Watson LLP

DESPITE an amendment in the House of Lords to retain the earnings link of the triple lock next year, MPs in the House of Commons have rejected the move.

The triple lock policy ensures the state pension rises by the highest measure of price inflation, earnings growth or 2.5 per cent. The Government has suspended the earnings element of the policy for 2022-23 following a higher rise in wage inflation due to the pandemic, which could have seen a rise of eight per cent.

As a result of the suspension of the triple lock, the state pension will rise by 3.1 per cent next April. Interestingly, the inflation rate is already forecast to average four per cent next year, so how will this lower increase in the state pension from April affect your finances and standard of living?

There is a real danger that the triple lock could be diluted further depending on the state of the country’s finances in the future, meaning the value of the state pension could be eroded further as a result. It is, therefore, more important than ever to have control of your retirement by planning as early as possible and to keep it under review.

However, the value of the State Pension should not be overlooked as this forms a critical part of a retirement income for nearly all retired households. For those entitled to the full State Pension, you currently receive a sum of £179.60 a week, just over £9,339 a year. For a retired couple, two state pensions would provide the household with over £18,678 of risk-free income each year. The full flat rate will rise in April to £185.15 per week, around £9,630 a year.

The Pensions and Lifetime Savings Association found that for a couple to retire on a “moderate” standard of living (outside of London), a household income of £30,600 a year would be needed. For a single person this sum is £20,800 a year.

For many people, the state pension will form the backbone of their retirement plans but if its value is eroded, it is vital you prepare in other ways – through personal pensions, investments or maybe from a rental property.

By arranging a full financial plan that is regularly reviewed you are more likely to have the type of retirement you want to enjoy.

To discuss your plans please contact Simon Mayoh on 07860 846370 or email