On BBC MoneyBox last week, Richard was concerned that his pension cap might not keep up with inflation. He said: “I have a final salary pension which is around £9,000 a year which I took early.
“It has a limit of five percent per year. The plan to retire early was effectively to have nine months off each year and work three months during the winter months.
“But there’s an element of having to rethink that now because if the pension isn’t going to be worth anything it was, then clearly I’m going to have to work year-round, even if it’s part-time.
“So it’s a big alteration to the plan really.”
Final salary pensions are known as ‘Gold-plated’ pensions.
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These are very similar to state pensions in the amount paid to individuals.
Gold-plated pensions are paid by a company to retired employees, which is a proportion of their salary and is guaranteed to rise with inflation.
However, this guarantee will not rise to the level forecast by the Bank of England, which could be 10 percent by the end of the year.
This is because there is a cap on the increase they will pay.
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These caps essentially reduce the amount of pension one could receive.
Mr. Leeks’ research found that there are about 4.2 million retirees, the average age is around 70 years old.
He said: “The average pension is around £8,800 per member, which is very similar to the state pension, very comparable.
“If we take inflation to 10 per cent and allow for all those historical caps and different services in the different windows, that’s where we got the figure where we think 10 per cent inflation would mean people have lost £400 a year. of pension. .
“So if inflation hit 10 per cent, they would get £400 more than they actually get and this could last their whole life, not just for the year.”
Mr Leeks continued: “If you take into account the fact that they would have been paid for 17 or 18 years, that’s where we get a sort of £7,000 cumulative impact.”
BBC Money Box is available on BBC Sounds.