Britons who rely on their State Pension have been urged to “supplement” their income to give them extra cash for their retirement.
Experts have said that the State Pension won’t be enough on its own to support those who leave the world of work.
They say that fiscal drag will bring more people above the tax allowance threshold.
Tax thresholds were frozen until 2028 under the previous Chancellor Jeremy Hunt, and it seems that this policy will stay in place.
This has been branded a “stealth tax” as more people end up paying without the Government explicitly raising taxes.
The Triple Lock guarantees that State Pensions in rise with the highest of inflation, average earnings increases, or by 2.5 percent.
But this guaranteed increase will drag more people above the tax threshold.
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “The state pension is the backbone of people’s retirement income. But for a decent retirement income it’s important you supplement it with your own retirement savings, whether that’s through a workplace pension or Self invested Personal Pension (SIPP).
“The latest data from HL’s Savings and Resilience Barometer shows only 38 per cent of households are on track for a moderate retirement income. So, clearly there’s still more to do.
“Small actions like upping your contributions when you get a pay rise or new job is one way of boosting your contributions. You should also make sure you’re making the most of any contributions your employer is making.
“Frozen tax thresholds mean the state pension is creeping closer to tax paying territory and a similar rise next year could even pass it.
“It could also be an issue for those also getting the Additional State Pension leaving them close to the threshold.
“With these freezes in place until 2028, there’s every chance, we could see pensioners relying only on the State Pension paying part of it in tax.”
