Autumn Statement: New bond but no guarantees on pensions triple-lock

Chancellor Philip Hammond has said the pensions triple-lock will remain until the next parliament. P

Chancellor Philip Hammond has said the pensions triple-lock will remain until the next parliament. Picture: Gareth Fuller/PA Wire - Credit: PA

While there may have been doom and gloom around for some, savers were given a welcome boost – after battling with record-low interest rates this year – with the announcement of a savings bond and a short-term safeguard on pensions rises.

Chancellor Philip Hammond assured pensioners they will continue to see their savings increase in line with whichever is highest of average earnings, the consumer price index or 2.5%, known as the triple-lock, until at least 2020.

There had been rumours before the Autumn Statement that the guarantee would be done away with and Mr Hammond's phrasing suggests it may be in peril in the future.

A report from the Commons Work and Pensions Committee recently said the triple lock is 'inherently unsustainable' and should be scrapped. The committee said the triple lock should not continue beyond 2020.

There was bad news for pensioners as Mr Hammond took aim at what he described as a 'double tax relief' by reducing the amount you can pay back into your pension scheme once you have drawn from it using pension freedoms to £4,000 from £10,000.

The new N&SI (National Savings and Investments) bond, available from spring 2017, will allow anyone aged 16 or over to save between £100 and £3,000 for three years at 2.2%.

N&SI is backed by the treasury so the money will be 100% secure and with interests low the bond offers better returns than most.

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Rachel Springall, finance expert at Norwich-based, said: 'The NS&I three-year fixed bond due to launch next year offers an outstanding rate compared to what is currently available on the market and it will be available for those aged 16 and over.

'Over a three-year term it is easily market-leading, and by paying 2.20% it would beat every single fixed savings bond on the market right now, hands down.

'That includes those fixed for up to a staggering seven years.

'However, savers must beware that the interest is only payable on balances of up to £3,000, which could deter investors who have a much larger pot.'

The flip side of the bond scheme is that the government will generate £6.3bn up to April 2020.

A predecessor account run by NS&I allowed people to save up to £10,000 at a rate of 4% for three years.

There was a further boost for savers with an increase on the ISA limit from £15,420 to £20,000 as of April next year.