Downing Street hints state pension ‘triple lock’ could be tweaked to ensure fairness: This week’s news roundup

Downing Street hints state pension ‘triple lock’ could be tweaked to ensure fairness: This week’s news roundup

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This week has seen the government hint the state pension triple lock could be watered down, predictions the zero-emissions target could see household bills soar, and news that Tesco Bank is closing all current accounts.

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Following warped wage figures resulting from the Covid pandemic, Downing Street has hinted the government could tweak the state pension triple lock to ensure fairness. The triple lock mechanism means state pensions could increase by 8% in April 2022, raising many questions and concerns. The government says it wants to ensure fairness for taxpayers and pensioners.

The 8% rise in state pensions could lead to increased costs of up to £3 billion a year for the Treasury. Average wage increases are part of the mechanism to set the state pension, but this year the figures have been skewed due to furlough and Covid.

Discussing concerns over the potential increase, a spokesperson for the Prime Minister said, 'The Chancellor has said previously that the triple lock is government policy. But we recognise people's concerns. We've got to ensure fairness for both taxpayers and pensioners.' 

‘Wiggle room’ over the definition of wage growth

Paul Johnson from the Institute for Fiscal Studies said there was some 'wiggle room' in the triple lock legislation regarding defining earnings growth. With growth this year skewed because of the pandemic, this is something that the government may look at to come to a more accurate earnings growth figure on which to base the state pension increase.

Some believe that the Chancellor, Rishi Sunak, may take this option after being provided with an estimate of 'underlying wage growth' by the Office for National Statistics earlier this month. This data provides a less skewed figure on which the government can base the state pension increase.

Sources from the Treasury have said that no firm decision has been made yet about next year's state pension increase, with a decision likely to be made in the autumn.

Household bills could increase by hundreds per year to meet the zero-emissions target

According to a new report, household bills could rocket by hundreds of pounds a year to fund the government's 2050 zero emissions target. While the costs associated with this will first hit industries involved in pollution, experts say firms will likely pass these on to consumers.

The report, released by the National Infrastructure Commission, claims the most affluent households could see their annual costs rise by £400, while the poorest could see expenditure grow by around £80 per year.

The government's target will see the deployment of expensive technologies in the coming years, including tools that remove carbon dioxide from the air.

Businesses in industries such as aviation and agriculture should be footing the bills for these processes, but officials said they would most likely pass the costs onto consumers, resulting in higher prices.

All current accounts to be closed by Tesco Bank

Tesco Bank has announced it will be closing all of its current accounts due to lack of use by customers. The supermarket giant, like some of its competitors, has been offering banking facilities for some years. However, it has now decided to close all current accounts because most customers no longer use them.

According to Tesco Bank officials, only around 12% of customers use their current account as their primary bank account. They also said there was very little activity on many accounts, with some being used for purposes such as savings rather than as current accounts for day-to-day transactions.

The news comes after Tesco Bank reported losses of £175 million in April, against profits of £193 million in the previous 12 months.

Closures scheduled for November

Tesco Bank stopped taking applications for new current accounts back in December 2019. All existing ones will be closed by the end of November 2021.

The bank said it would support account holders to find a suitable alternative that they can use once their Tesco Bank current account closes.

A spokesperson for the bank said, "With so few of our current account customers using it as their primary account we want to support them to find a suitable alternative dependent on their circumstances. We will pay particular attention to supporting any vulnerable customers and those in need of financial assistance."

The bank will write to all current account holders over the next two weeks to advise them of the next steps.

Pandemic debt surge sparks call for less aggressive debt collection

A recent warning of a post-pandemic debt surge in the UK has sparked calls for less aggressive debt collection by bailiffs. A plan is now being set up to try and cut back on the problem of aggressive debt collectors, as officials expect a sharp rise in debt problems. 

As part of a new agreement, a new enforcement body, The Enforcement Conduct Authority, will be set up. This agency will oversee debt collection processed to ensure no unfair or aggressive treatment of those in debt. In addition, it may be able to help vulnerable people in debt to reset their finances.

Concerns arise following the return of bailiffs

During the pandemic, the work of bailiffs was put on pause to reduce the risk of infection. However, now restrictions have been lifted, bailiffs will restart pursuing people for things such as council tax debt, parking fines, and enforcing evictions.

There are concerns that the impact of the pandemic on the economy could lead to bailiffs being even more aggressive in a bid to recover money. However, there has already been an increase in complaints about bailiff enforcement. There are hopes the new agreement will tackle the issue. The plan has been created by the Centre for Social Justice along with bailiffs themselves and debt charities.

A spokesperson from the Centre for Social Justice said, "What looms ominously on the horizon is no less than a tidal wave of debt. What this means in practice is that, in the months and indeed years ahead, tens of thousands more people are expected to receive a call or knock at the door from a bailiff."

The new ECA will launch at the end of this year. As part of its role, it will set out clear rules and regulations for bailiffs and enforce sanctions against those who break the rules.

Study finds home and garden improvements are top goals among retirees

According to a recent study, most people’s spending goals when they retire is to give their home and garden a makeover. The research carried out by Canada Life involved polling homeowners who were moving toward retirement and asking what their top spending priorities were.

The research showed that one-third of those aged 40 and over planned to spend money on doing up the home and garden after retirement. The data also showed that 23% were looking to spend money on helping their kids and grandchildren to buy a home, while a quarter of over-40s plan to spend money on a lavish holiday to celebrate retirement. Another 15% said they wanted to put money toward helping younger members of their family with education costs.

Other spending goals identified following the poll were paying off debts, including mortgage debt, and buying a new car or caravan to enjoy retirement. A further 32% said they were planning to use any money freed up in retirement to supplement their day-to-day living costs.

In addition, the figures showed that nearly a third of those polled plan to continue working beyond retirement age to help boost their income.

Accessing savings and investments

The research also revealed that more than 40% of over-40s planned to fund their retirement and spending goals by accessing savings and investments. In addition, 20% said that they planned to take a lump sum from their workplace pension pot.

Those taking part in the poll were also asked about their plans when it came to their homes. Around 14% of respondents said that they plan to sell their existing home and downsize when they retire. In addition, 12% said that they were considering tapping into the equity in their home to raise more money to enjoy their retirement.

Holidaymakers could struggle to get insurance to cover the cost of cancellation if pinged

Many travel insurance companies have said they will not cover holidaymakers for the cost of their trip if they have to cancel due to being pinged by the NHS app. This will put travellers in a difficult position as if they must self-isolate, they risk losing the money they have paid for their holiday.

With hundreds of thousands of people being pinged by the app or contacted by the tracing service, the news they may not be covered is sure to cause concern among holidaymakers. Many have been eager to book a holiday following the chaos of the past 16 months, but the risk of being pinged and losing their money if they have to self-isolate will most likely make some think twice about booking.

Pingdemic could cause holiday chaos

Insurers refusing to cover those who are pinged means the so-called pingdemic could end up causing even more chaos. However, officials say not all travel insurance firms will refuse to cover those pinged before travel.

According to analyst firm Defaqto, close to 90% of holiday insurance companies are now willing to cover those who have to cancel their trip because they have contracted Covid. However, when it comes to cancelling due to self-isolating, this figure falls to less than 60%.

Anna-Marie Duthie from Defaqto said, "Policyholders should read their policies carefully to be sure they fully understand what cover they have, and if in doubt should contact their insurers before changing any travel plans." 

Those who receive notification from NHS Test and Trace must self-isolate under the current law. However, those pinged by the NHS app are advised to self-isolate rather than being legally required to do so.

This means that many pinged by the app and advised to self-isolate may decide to continue with their travel plans rather than risk losing their money. However, this is not an option for those contacted by NHS Test and Trace.

Image Credit: JonathanWilkins at Pixabay

Reno Charlton
Reno Charlton
Reno joined Age Group in 2020 and has nearly 20 years of writing experience. Although she specialises in writing about finance topics and covering finance news, Reno is also a published author and has written several children's books and short stories.
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