UK. Millions face cut in value of workplace pensions
Millions of retirees will see the future value of their pension cut owing to a planned change in the way payments are calculated from 2030. Many of those with so-called defined benefit workplace pensions see their pension payments increase each year in line with the rising cost of living.
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The way this annual rise is calculated is expected to become less generous from February 2030. Chancellor Rishi Sunak ruled out making a change any earlier.
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Women and new retirees will be hardest hit by the changes which were revealed in documents released alongside the chancellor’s Spending Review, but not mentioned in Mr Sunak’s speech.
Over time, the value of their pensions could be thousands of pounds less than they might have expected. A 65-year-old now will see their total retirement income drop by 4% or 5% compared with their expectations.
That is an £8,000 drop for a 65-year-old woman with average life expectancy. The proposed changes do not affect the state pension, which will rise by 2.5% in April in line with the government’s triple-lock promise.
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