Money expert Martin Lewis has cleared up what’s happening to pensions following Rachel Reeves’ spring statement this week. The Chancellor caused alarm among some viewers after she appeared to signal a possible change to pensions as part of her economic plans announced on Wednesday.
As well as announcing cuts to welfare, a raise in National Living Wage and a cut to the economic growth forecast, Reeves had mentioned ‘reforming pensions’ as part of her broad plan for the UK economy between now and the end of the decade. She also highlighted reforms to the pension system and a national wealth fund, adding it was part of a “serious plan” for economic growth.
Martin Lewis summed up some of the key announcements following Reeves’ speech as he said: “The Chancellor has sat down after the #SpringStatement. As expected this is mainly economic and departmental spending not inside my area of consumer finance (hence me leaving it to others).
“Little new in that area that hasn’t been announced already, barring another welfare cut, the UC [Universal Credit] health element to be reduced by 50% and frozen for new claimants (unless there’s more in the underlying docs)”.
One follower, @woofma, then quizzed Martin about a reference to ‘pension reform’ mentioned by the Chancellor.
They said: “She sneaked in that there would be reforms to the State Pension but didn’t have the courage to expand on it.”
Martin then replied to clear up that reforms would be for private pensions, such as workplace pensions and SIPPs, not the state pension.
He said: “No she said reforming our pensions system, it was private not state pensions and likely refers to getting uk pensions funds to invest more in the UK.”
There had been fears that more aggressive pensions changes could be on the cards in the future. Conservative leader Kemi Badenoch has already signalled that she would look at ‘means testing’ the state pension, while financial experts have expressed doubts about the long-term future of the triple lock.
But for now, pensions will increase by another 4.1% in April, or £471 per month for a state pensioner on the full new state pension with a full National Insurance record.
