Personal finance

What can we do to ensure that our retirement is as comfortable as possible?

The government has temporarily suspended a key provision of the pensions triple lock.

For years I have been warning that in this day and age, a comfortable retirement is no longer something we can expect or take for granted. It requires forward thinking, and careful planning.

Latest events have, once again, proved me right.

This year, the UK Government has temporarily suspended a key provision of the pensions triple lock, one of the mechanisms designed to ensure that our retirement income retains its value in the face of rising inflation.

Basically the government is saying: “the situation of the past year was not foreseen, and so we're justified in putting this increase on hold, as we simply can't afford it.”

In a nutshell, the next increase should have been an unusually generous 8.3 per cent, reflecting an equally unusual increase in the national average wage as incomes bounced back to normal following furlough.

Instead, the pension will increase by 3.1 per cent next year, in line with September's estimate of inflation.

This alteration of the triple lock has set alarm bells ringing in the industry. While the government is calling this a ‘temporary' suspension of the triple lock's link to the national wage, many suspect that they may make the suspension permanent.

The bigger picture is that the cost of the state pension is a massive part of government expenditure, and one which they'll be seeking to reduce, bit by bit, in future years.

So facing this depletion of our state pension, as inflation proceeds to rise in the future, what should we be doing now to maximise our state pension income?

First, you can opt to pay in more than the statutory minimum contribution from your salary each month, on an ongoing basis, throughout your working life. Your employer may even be prepared to match your additional contributions, giving you ‘free' cash you otherwise wouldn't have got.

If there are any gaps in your pension saving, you can make pension ‘top-ups', which are subsidised by the government.

For example: former pensions minister Steve Webb has pointed out that if you have missed a year of National Insurance contributions, you can fill the gap with a once-off payment of £800, which could add £250 a year to your state pension.

These days, having multiple employers and jobs throughout our career is increasingly common – which means that many of us have small pension pots from a number of previous jobs.

Combining your defined contribution pensions into a single pot can save you on fees.

If, however, you have a defined benefit (final salary) pension they can often be of more value if left alone. Advice should be taken, before making any decisions on combining pension pots.

The recent years of low interest rates have not been kind to savers. If you have money languishing in an Isa or savings account at a low rate of interest, you should consider using it to make a lump sum contribution to your pension. Doing so will probably make that money work harder for you – and don't forget, you get tax relief as soon as you do!

These are just a few of the possible steps you can take to boost your future income from your state pension.

As ever, the wisest step of all is to talk to a professional specialising in pensions advice!

:: Michael Kennedy is an independent financial adviser and pensions specialist and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice Ltd or at

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Personal finance