State pension: 'Dangerous game' of relying on state pension sum despite expected £200 payment |  Personal finance |  Finance

State pension: ‘Dangerous game’ of relying on state pension sum despite expected £200 payment | Personal finance | Finance

With the return of the triple lockdown next year, state pensioners are expected to see their payments rise in line with inflation. Financial analysts’ estimates suggest that inflation should be around 10%, which would lead to an increase in payments of £200 per week. However, experts warn of the dangers posed by Britons choosing to rely solely on the state pension despite the expected rise in payments.

Richard Eagling, a personal finance expert at NerdWallet, urged those considering retirement plans to act as soon as possible.

Mr. Eagling explained: “It is wise to start thinking about it as early as possible because of the power of compound interest.

“Essentially, that’s when your money earns interest, and then that interest earns interest, and so on.

“Over time, this could mean your retirement pot can grow at a faster rate, especially if you keep contributing each month.”

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As it stands, the new state pension is £185.15 a week for claimants, but many are still struggling to make ends meet due to the cost of living crisis.

Energy bills are set to rise by 27% from this month despite the introduction of the government’s price guarantee.

On top of that, inflation currently stands at 9.9% and is expected to remain elevated for the foreseeable future.

The reintroduction of the triple lockdown should allay concerns as state pension payments are likely to rise significantly.


The triple lockdown is a government promise to raise state pensions by 2.5%, average earnings or inflation; whichever is the highest.

With inflation likely to top 2.5% or average earnings, a £200 payout increase could be introduced to state pensions next April.

This is based on the forecast that the consumer price index (CPI) inflation rate will be 10% for the month of September.

Despite this increase in payments, Mr Eagling warns that a state pension will not be enough to live on for many older households.

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He added: ‘Sometimes you hear people who haven’t made any plans for their retirement saying they’re not worried because they’ll only be living off their state pension.

“It can often be based on a lack of awareness of how little the state pension actually pays.

“The amount you receive will depend on your National Insurance record. Moreover, who knows what the state pension will be when you retire and at what age you will be able to get it?

“It’s a dangerous game to rely solely on the state pension without saving anything yourself.”

In light of this, the financial expert shared advice on how people should prepare for retirement.

Mr Eagling said: “Ask yourself what a good retirement looks like for you. Do you want to retire early and stop working at 55 or 60?

“Perhaps you like to work and will only semi-retire, work part-time, start your own business, or do volunteer work instead of quitting work altogether.

“Whatever you imagine your retirement will look like, figure out what you need to do now to make it achievable.

“There are many free online pension calculators that can help you. Pop a few numbers into a pension calculator to see how much you’re on track to get based on your current pension contributions and pension values.

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