Triple Lock for non-pensioners

TooMuchSloeGin

I will get my state pension, if all goes well, sometime in 2028. I have an estimate from the DWP website (at today's value) which is around £100. Let's just assume for the sake of the argument that this is my pot.

This will however grow in the next 12 years and I think (but I may be wrong) that my pension's value accrues at the same rate as an actual pension in that year (ie according to those famous triple lock rules). I know... as long as the rules stand: if they change all bets are off. Although even then I'd assume that my pension grows in parallel with pensions actually paid.

Is that assumption true?

dunstonh

Best thing to do is use the current pension forecast figure for the state pension as it puts it in todays terms. If you get more than that (in real terms) then great but you wouldnt want to project on it being more.

The triple lock is not sustainable. It will have to end at some point. So, best not to predict it being there.

TooMuchSloeGin

dunstonh wrote: »

The triple lock is not sustainable. It will have to end at some point. So, best not to predict it being there.

Yes, I agree. I am not looking for absolute numbers but it was the triple lock thing that got me thinking. So perhaps I should rephrase.

If somebody starts their pension today and gets £100 pw, this will in some way grow over time. Let's say in 12 years time they get £126.82 (that's a flat 2% plus every year). Will my pension's value in 12 years' time be £126.82? That's what I mean

bigadaj

TooMuchSloeGin wrote: »

Yes, I agree. I am not looking for absolute numbers but it was the triple lock thing that got me thinking. So perhaps I should rephrase.

If somebody starts their pension today and gets £100 pw, this will in some way grow over time. Let's say in 12 years time they get £126.82 (that's a flat 2% plus every year). Will my pension's value in 12 years' time be £126.82? That's what I mean

Most likely option will be to do away with the triple lock and align with inflation, average earnings or both.

So in all likelihood it will retain its value in real terms, but not grow. This makes it easy in some ways as you know what that will buy now and it's likely to buy the same or similar when you come to retire.

PensionTech

I'd assume that my pension grows in parallel with pensions actually paid.

I would have thought so. To do otherwise would effectively create a new level of state pension every year, which would be administratively horrendous, and rather contrary to the new "single-tier" state pension system. However, there will certainly be some kind of amendment to the state pension in the 12 years leading up to your retirement, so in theory anything could happen - but I would still consider it unlikely that different increases would be introduced for the state pension before and after SPA.

LXdaddy

TooMuchSloeGin wrote: »

Yes, I agree. I am not looking for absolute numbers but it was the triple lock thing that got me thinking. So perhaps I should rephrase.

If somebody starts their pension today and gets £100 pw, this will in some way grow over time. Let's say in 12 years time they get £126.82 (that's a flat 2% plus every year). Will my pension's value in 12 years' time be £126.82? That's what I mean

assuming there are no changes in the next 12 years - then YES.


But - your £100pw estimate that you got today is possibly based on your contribution record to date rather than assuming the you continue paying NI for the next 12 years and will then have a larger pension entitlement - If so then as well as the 2% per year increase you have assumed, you would have increased the base number as will - so your pension would be higher than the other person who started their pension today.


And of course any number of other changes could be introduced which might have different impact for those reaching SP age before a date and those reaching SP age after that date.

TooMuchSloeGin

LXdaddy wrote: »

assuming there are no changes in the next 12 years - then YES.


But - your £100pw estimate that you got today is possibly based on your contribution record to date rather than assuming the you continue paying NI for the next 12 years and will then have a larger pension entitlement - If so then as well as the 2% per year increase you have assumed, you would have increased the base number as will - so your pension would be higher than the other person who started their pension today.

If you re-read my OP, you'll see my £100 starting point was -- for the sake of this argument -- supposed to be exactly that: FIXED.

The only thing I want to know if whether my pension value rises in parallel with the rises an identical existing "live" pension experiences.

I take it that this is the case.

AnotherJoe

TooMuchSloeGin wrote: »

If somebody starts their pension today and gets £100 pw, this will in some way grow over time. Let's say in 12 years time they get £126.82 (that's a flat 2% plus every year). Will my pension's value in 12 years' time be £126.82? That's what I mean

I'd say "not really" because you used the word "value" and £126.82 in 12 years time will quite like be worth the value of somewhere around £100 today. eg £126.82 in 12 years time will buy as many Mars Bars or Big Macs as £100 would today.

TooMuchSloeGin

AnotherJoe wrote: »

I'd say "not really" because you used the word "value" and £126.82 in 12 years time will quite like be worth the value of somewhere around £100 today. eg £126.82 in 12 years time will buy as many Mars Bars or Big Macs as £100 would today.

Let's hope so:-) not that one Big Mac goes for £50 then!

At any rate I am only interested in whether the development of the actual sums paid (to avoid the word value) goes in parallel.

AnotherJoe

TooMuchSloeGin wrote: »

Let's hope so:-) not that one Big Mac goes for £50 then!

At any rate I am only interested in whether the development of the actual sums paid (to avoid the word value) goes in parallel.

From a quick google, BM in 1977 (when they started in UK) about 40p. Now about £3

The answer to your question must be "yes" because you will getting the same rate as anyone else will be otherwise there would be pension rates depending what year you started your pension which would be madness.

CLAPTON

basically YES , thats the way it has always been and it would seem madness to change it as it would be seen as massively unfair.