The latest inflation figure for September was higher than expected, remaining at 2.7%. This is set to have a direct effect on pension savings and personal savings accounts, the Daily Telegraph reports.
Financial analysts expected inflation to slow down last month to 2.4% but this did not happen, meaning that pensioners in the UK will see a 2.7% increase in their state pension next year, from £110.15 to £113.12.
The inflation rate published by the Office for National Statistics is calculated on the basis of the Consumer Price Index, so pension schemes that are linked to the index are also set to change. These include some occupational schemes and all public service pensions.
The higher inflation is set to have an effect on individual savings accounts (ISAs) and Junior ISAs as well. The ISA allowance will rise from £11,520 to £11,880 next year, while the Junior ISA allowance will increase to £3,840 from £3,720. However, the government is reported to be preparing to impose a cap on the money that can be saved in ISAs, the Financial Times pointed out. The news has been met with opposition from many financial services firms that claimed that ISAs were among the most popular savings methods among British consumers and they should not be used for political purposes.
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