State pension warning: How to ‘protect your retirement’ if payment MEANS-TESTED
Analysts are sharing how Britons can “protect your retirement” if any future Government decides to means-test the state pension.
Currently, the state pension is a universal payment with everyone entitled to it once they reach 66, however this age threshold is set to rise in the years to come.
Amid concerns over benefits spending, think tanks have suggested controversial changes to the retirement system.
Among them include raising the pension age earlier than anticipated and overhauling the triple lock, when is the metric used to determine the annual payment rate hike.
One suggestion has been to means-test the state pension which would reserve for payments for those on means-tested benefits.
This was put forward by Sir Edward Troup, a former executive for HM Revenue and Customs (HMRC) who previously advised Shadow Chancellor Rachel Reeves, called for means-testing.
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Some experts have called on the state pension to be means-tested
GETTY
During an interview with LBC, he claimed that older Britons should “contribute possibly more” to the HMRC.
Troup shared: “My generation, the pensioners’ generation, if they’ve got income, if they’ve got means, should be contributing at least as much, and possibly more than those people who are working, bringing up families and are really contributing now to that country.'”
His remarks were criticised widely and do not reflect current Government policy but do reflect a train of thought that is gaining prominence.
Despite this financial advisors for AFH Wealth Management have broke down what people can do to safeguard their retirement
According to these pension experts, there are four key acts people can carry out to ensure a healthy savings pot after retiring.
These include:
- Choosing to retire later than the existing state pension age
- Boosting pension contributions
- Adjusting individual standard of living
- Changing the level of risk pension pots are exposed to.
Britons are looking for the best ways to bolster their retirement prospects GETTY
The financial advisors outlined the potential pitfalls from placing pension funds in riskier investments.
They explained: “While doing this could expose your retirement fund to greater growth potential, it could also increase the possibility of losses.
“For this reason, you should always speak to a financial adviser before increasing or decreasing the level of risk your pension is exposed to.
“Regardless of whether the state pension becomes means-tested or not, understanding whether your retirement fund will support the standard of living you want is vital.”
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