NI threshold increase will address cost of living pressures for workers but the measures in Spring Statement will do little to help pensioners, says Continuum

Plymouth (23/03/22) – The tax cuts and additional measures announced by Chancellor Rishi Sunak will do little to help pensioners tackle the rising costs of living due to inflation.

Today Chancellor Rishi Sunak promised to cut the basic rate of income tax to 19p in the pound and increased the National Insurance threshold to £12,750 a year from July.

However, few of the measures in his Spring Statement will help pensioners and those close to retirement to manage inflation and maintain their desired lifestyle, according to national IFA firm Continuum.

Ben Alcock, Chartered Financial Planner at Continuum, said: “The £3,000 increase to the National Insurance threshold will be a welcome relief for many lower-earning households and help them mitigate rising living costs.

“The 5p cut to fuel duty and the increase to the household support fund will also help many households struggling with the increased cost of living but will do little for the many pensioners that may be particularly vulnerable to inflation.

“With the suspension of the pensions triple lock, many industry commentators were hoping for additional measures such as a temporary increase to the State Pension rate to help pensioners with the unprecedented rise in their living costs.”

Martin Brown, Managing Partner at Continuum, said it is especially important for those close to retirement or already in drawdown to consult a financial adviser to make sure they have a long-term plan in place to manage inflation and maintain their desired lifestyle.

He said: “The spending power of pensioners has also been impacted by soaring inflation. This morning we heard how CPI hit a 30-year-high at 6.2% in February with the prices of food, utility bills and petrol all on the rise. Pensioners may be particularly vulnerable to inflation due to being reliant on pension pots which need to last them twenty years or more.

“December’s 2020/21 FCA retirement income data revealed that over 40% of pension savers are withdrawing from their pension pot at an annual rate of 8% or more. With inflation surging if the data was to be retaken now that annual rate would likely be even higher. By entering drawdown in cash and withdrawing at such a high rate, many pension savers are increasing the risk of running out of money.

“In a time of surging inflation, it is more important than ever for retirees to get portfolio positioning right in order to maintain their lifestyle.

“Pension savers in drawdown need to have a long-term plan in place to manage inflation and make sure their withdrawals are sustainable long-term if their retirement income is to remain resilient in the face of what we hope will be a short-term inflation hit.”

Editors Notes – About Continuum

Continuum is a modern brand of financial advice. It is a partnership of like-minded Independent Financial Advisers sharing a common passion, approach and commitment to practicing true financial planning.

We are dedicated to providing a modern financial planning experience – one that focuses on the client.

Assets under influence have increased to over £1.49bn

We believe that by creating a three-way partnership between Continuum, the adviser and the client, we also create an environment where each party can only succeed and grow if the other parties also succeed and grow.

Continuum is a trading name of Continuum (Financial Services) LLP which is authorised and regulated by the Financial Conduct Authority. Continuum (Financial Services) LLP is a Limited Liability Partnership

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