3.9% State pension increase means my NHS pension drops

casjen

The headline increase sounds great and also my NHS pension is due to rise by 1.7% so looking forward to a bit of extra money. But no because the tax free allowance isn't rising. Just received tax codes for new year and in fact despite the 1.7% NHS increase the actual  net amount is going down. Instead of £478 going to £486 , its down to £476. Whilst this may not mean much to many people it is to me . While its correct as per the way tax works it is a hidden decrease that a lot of people will be affected by and I think hasn't been thought out (or maybe it has! ) .

AlanP_2

So would you prefer not to have had an above CPI increase on your State Pension?
Surely the combined SP + NHS pension will be more with the increases?

Dazed_and_C0nfused

I think you have misunderstood.

Your take home pension from the NHS may be reducing by £2/month but how much is your State Pension increasing by per month?

You are still better off overall.

comeandgo

The budget isn't past yet, due to brexit and other government problems it is due in March. The tax free allowances will be announced then.

luvchocolate

We have been very lucky that tax allowances have risen each year for a while now,my works pension does not increase but my state pension has risen, so my tax liability has risen, but I am still a small amount better off.
Lets see if the budget shows any changes, but the government did say they wanted the tax allowance to rise to £12500, personally i do not expect it to change this year, but who knows!! 

BoGoF

comeandgo said:

The budget isn't past yet, due to brexit and other government problems it is due in March. The tax free allowances will be announced then.

Although in the 2018 Budget they did say the 2020/21 personal allowance and basic rate threshold would stay at the same level as 2019/20. 

Obviously a lot has changed since then so who knows what will happen.

casjen

My point is being ignored. I know overall  there is an increase. Why people have to make such irrevallent replies ? The point is that the media headline is pensioners better off by 3.9% but the reality is that taking into account any private pensions means they drop because of increased tax .... so its not a 3.9% increase overall .. And  the state  pension is not going up because of CPI but because of the triple lock average earnings part so why is that comment relevant.. Also the frozen allowance has been known for months

BoGoF

What are you looking for, sympathy?
Fact is state pension has increased by 3.9%. Not every state pensioner has another pension, think yourself lucky.

GunJack

For a pensioner just on SP, yes it's a 3.9% GROSS rise. This may or may not be the NETT rise, depending on the level of the pension concerned. Any personal pension in addition to SP will have it's tax code affected, it's just the way it works - if you get more, your tax liability rises....nothing new there...

Gary1984

casjen said:

My point is being ignored. I know overall  there is an increase. Why people have to make such irrevallent replies ? The point is that the media headline is pensioners better off by 3.9% but the reality is that taking into account any private pensions means they drop because of increased tax .... so its not a 3.9% increase overall .. And  the state  pension is not going up because of CPI but because of the triple lock average earnings part so why is that comment relevant.. Also the frozen allowance has been known for months

It's your initial point that's irrelevant, not the replies.  You have 2 pensions, one NHS and one state.  Overall you're getting a healthy increase.  Why does it matter than one is decreasing by £2 due to additional tax when the other is getting a healthy untaxed increase (of £28.60 assuming you have a full, new state pension).  

'Pensioners better off by 3.9%' clearly only applies to the state pension.  Headline writers can't be expected to take into account the individual circumstances of every single pensioner.  Some will have substantial share portfolios that will have had double digit increases in the last year.  Others, like yourself, will have pensions and annuities that increase by varying amounts. Some may have had a lot of their wealth in Woodford funds and have seen their wealth dramatically decrease.  You can't possibly reflect the full range of possible outcomes in a single headline.

DairyQueen

luvchocolate said:

We have been very lucky that tax allowances have risen each year for a while now,my works pension does not increase but my state pension has risen, so my tax liability has risen, but I am still a small amount better off.
Lets see if the budget shows any changes, but the government did say they wanted the tax allowance to rise to £12500, personally i do not expect it to change this year, but who knows!! 

The personal allowance for this tax year (2019/20) is £12,500 so it has already risen to that level. This link describes current policy on tax thresholds. They will not rise next tax year (2020/21) but, from 2021/22, will rise in line with the CPI. I think it unlikely that this government will meddle with this particular policy in this year's budget but stranger things have happened.