Pensions - Articles - Triple Lock Plus policy will have more pensioners paying tax


One of the main pension issues during the Election campaign has been on how many pensioners now have to pay tax. One specific policy – the Conservative’s ‘triple lock plus’ policy – focuses on this specific issue.

 It is based on the observation that the standard new state pension (currently around £11,500 pa) is only slightly below the tax allowance (£12,570) and that within a few years the new state pension could be above the tax threshold. In this scenario people would be paying tax who had no other income than their state pension. The policy solution to this is to ‘triple lock’ the tax allowance for pensioners as well, making sure that the pensioner tax allowance is always above the standard new state pension rate.

 We have now undertaken some research into this policy, and in particular the statement on the Conservative manifesto that (capitals as per the website):

 “So if you vote to stick with the plan, Rishi Sunak and the Conservatives will not only guarantee the Triple Lock — we’ll introduce the Triple Lock Plus. This means the personal allowance for pensioners will rise every year — ensuring they NEVER pay tax on their state pension”.

 We find that in fact this policy would not deliver the stated objective. Rather, we estimate that around 2.5m pensioners would still be paying tax on their state pension even if this policy were to be implemented. This is mainly because most pensioners are not on the standard rate of the new state pension but are actually on the old state pension system, where amounts can vary from a few pounds per week to several hundred pounds per week. Over 2 million pensioners on the old system – roughly evenly split between men and women – get pensions now which are in excess of the tax allowance and would continue to do so if allowances and pensions rose by the same percentage.
  

Back to Index


Similar News to this Story

4 ways completing a tax return can help boost your pension
Missing the Self-Assessment deadline not only risks a penalty for late filing but could cost individuals hundreds, if not thousands of pounds in uncla
DWP holds AE thresholds with GBP90bn of pensions expected
The DWP has issued its review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2025/26, retaining all three thresholds at
Response to Triple Lock means testing comments
Aegon has called for ‘a future focused debate on a sustainable state pension’ following comments on the Triple Lock by Conservative leader Kemi Badeno

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.