State Pension rise 2024/2025 story

hugheskevi

pinnks said:

hugheskevi said:

double_dutchy said:

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

Something I am surprised never gets any mention is that if no changes had been made - no Triple Lock, no 2.5% underpin, no RPI/CPI change - just straight RPI uprating throughout the whole period since 2010, the State Pension today would be higher than it is (Basic State Pension would be about £2 more per week).

It is quite something to get so much credit for making changes that led to pensioners being worse off! Starmer and Reeves could do with taking note.

That may be correct but the state pension increase has been statutorily linked to the increase in average earnings including bonuses since before 2010.  It was the last labour government than swapped back from CPI to Earnings if memory serves.

The policy of the last Labour government was (a) a party pledge to increase BSP by at least 2.5% (but that was not statutory) (b) the statutory minimum increase of RPI with a floor of zero (so did not reduce if there was deflation) and (c) ad hoc increases.

The effect of the above was to broadly deliver growth equal to earnings growth over the duration of the Labour administration, but the statutory uprating was RPI with a floor of zero for BSP. SERPS and State Second Pension increased in line with earnings until State Pension age and by RPI with a floor of zero thereafter.

Pensions Act 2007 introduced earnings uprating, which was not due for implementation until April 2012. In practice, that was superseded by the Triple Lock.

MK62

hugheskevi said:

double_dutchy said:

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

Something I am surprised never gets any mention is that if no changes had been made - no Triple Lock, no 2.5% underpin, no RPI/CPI change - just straight RPI uprating throughout the whole period since 2010, the State Pension today would be higher than it is (Basic State Pension would be about £2 more per week).

It is quite something to get so much credit for making changes that led to pensioners being worse off! Starmer and Reeves could do with taking note.

My maths differs......the basic state pension was £5078pa in April 2010......straight RPI uprating (using the Sept figure prior to each budget, as the govt does) would have seen it rise to £8528 for this tax year.......it's actually £8814.  (5078/225.3*378.4=8528........where 225.3 is the Sep10 RPI index and 378.4 is the Sep23 RPI index)

How did you calculate that the basic SP would have risen to around £8918pa using RPI uprating alone?

DOH....scratch that......I've missed a year off......

hugheskevi

MK62 said:

hugheskevi said:

double_dutchy said:

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

Something I am surprised never gets any mention is that if no changes had been made - no Triple Lock, no 2.5% underpin, no RPI/CPI change - just straight RPI uprating throughout the whole period since 2010, the State Pension today would be higher than it is (Basic State Pension would be about £2 more per week).

It is quite something to get so much credit for making changes that led to pensioners being worse off! Starmer and Reeves could do with taking note.

My maths differs......the basic state pension was £5078pa in April 2010......straight RPI uprating (using the Sept figure prior to each budget, as the govt does) would have seen it rise to £8528 for this tax year.......it's actually £8814.  (5078/225.3*378.4=8528........where 225.3 is the Sep10 RPI index and 378.4 is the Sep23 RPI index)

How did you calculate that the basic SP would have risen to around £8918pa using RPI uprating alone?

I used September RPI figures from ONS to uprate each year, starting from value of BSP in April 2011 (April 2011 being the last year where RPI was used for the annual increase):

	BSP (actual)	RPI	RPI
2011	£102.15		£102.15
2012	£107.45	5.60%	£107.87
2013	£110.15	2.60%	£110.68
2014	£113.10	3.20%	£114.22
2015	£115.95	2.30%	£116.84
2016	£119.30	0.80%	£117.78
2017	£122.30	2.00%	£120.13
2018	£125.95	3.90%	£124.82
2019	£129.20	3.30%	£128.94
2020	£134.25	2.40%	£132.03
2021	£137.60	1.10%	£133.49
2022	£141.85	4.90%	£140.03
2023	£156.20	12.60%	£157.67
2024	£169.50	8.90%	£171.70

MK62

hugheskevi said:

MK62 said:

hugheskevi said:

double_dutchy said:

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

Something I am surprised never gets any mention is that if no changes had been made - no Triple Lock, no 2.5% underpin, no RPI/CPI change - just straight RPI uprating throughout the whole period since 2010, the State Pension today would be higher than it is (Basic State Pension would be about £2 more per week).

It is quite something to get so much credit for making changes that led to pensioners being worse off! Starmer and Reeves could do with taking note.

My maths differs......the basic state pension was £5078pa in April 2010......straight RPI uprating (using the Sept figure prior to each budget, as the govt does) would have seen it rise to £8528 for this tax year.......it's actually £8814.  (5078/225.3*378.4=8528........where 225.3 is the Sep10 RPI index and 378.4 is the Sep23 RPI index)

How did you calculate that the basic SP would have risen to around £8918pa using RPI uprating alone?

I used September RPI figures from ONS to uprate each year, starting from value of BSP in April 2011 (April 2011 being the last year where RPI was used for the annual increase):

	BSP (actual)	RPI	RPI
2011	£102.15		£102.15
2012	£107.45	5.60%	£107.87
2013	£110.15	2.60%	£110.68
2014	£113.10	3.20%	£114.22
2015	£115.95	2.30%	£116.84
2016	£119.30	0.80%	£117.78
2017	£122.30	2.00%	£120.13
2018	£125.95	3.90%	£124.82
2019	£129.20	3.30%	£128.94
2020	£134.25	2.40%	£132.03
2021	£137.60	1.10%	£133.49
2022	£141.85	4.90%	£140.03
2023	£156.20	12.60%	£157.67
2024	£169.50	8.90%	£171.70

My bad, missed a year.......

Calc should have been 5078/215.3*378.4=8925 .......(where 215.3 is the Sep09 RPI index and 378.4 is the Sep23 RPI index).....which is close enough to be a rounding error.

400ixl

Such an increase will of course push more into the the 20% tax bracket, so how are they going to deal with that? Tax could start burning a hole in this and future year raises.

MK62

I guess we'll have to wait and see what govt does here.......not going to look good giving pensioners a CPI rise and then taking some of that back as tax, leaving the net rise below CPI......which is why I don't think it will happen tbh......but who knows what the govt are thinking on this?

Exodi

400ixl said:

Such an increase will of course push more into the the 20% tax bracket, so how are they going to deal with that? Tax could start burning a hole in this and future year raises.

MK62 said:

I guess we'll have to wait and see what govt does here.......not going to look good giving pensioners a CPI rise and then taking some of that back as tax, leaving the net rise below CPI......which is why I don't think it will happen tbh......but who knows what the govt are thinking on this?

I'd be reasonably confident they will do nothing (and I'm almost certain they won't create a special increased tax allowance just for pensioners, or make the triple lock + 20%').

And as usual when discussing these things, we're implying a scenario of a pensioner who earns just the state pension, and nothing else.

Someone earning the State Pension and at least a few thousand pounds annually from any other income source (e.g. DB pension, private pension, annuity, etc) would already be paying tax on each state pension increase.

Freezing of tax thresholds affects everyone.

hugheskevi

Exodi said:

And as usual when discussing these things, we're implying a scenario of a pensioner who earns just the state pension, and nothing else.

Someone earning the State Pension and at least a few thousand pounds annually from any other income source (e.g. DB pension, private pension, annuity, etc) would already be paying tax on each state pension increase.

As at May 2023 only 27% of State Pension recipients received new State Pension. Of those, only 51% received the full rate of new State Pension (or higher).

That means 14% of all State Pension recipients in May 2023 received the full new State Pension or higher.

Ignoring the old/new State Pension distinction, 43% of all State Pension recipients received at least £200 p/w State Pension (but the uprating of most of these is unclear, as it will be a combination of CPI and Triple Lock).

So the starting pool is less than half of State Pensioners, before you begin to consider other income.

There are over 1.36 million pensioners who pay income tax based on their State Pension alone (assuming a standard Personal Allowance), making a mockery of any statements about pensioners paying tax on their State Pension for the first time. Taking this group out too leaves a pool of almost exactly 1/3 of State Pension recipients, and this is the group that could be close to the basic rate income tax threshold, but many of those will have other income and already be taxpayers.

Source: DWP Stat Xplore tool, May 2023 data

MK62

True, but then does it really matter how a pensioner's income is made up, whether SP alone or SP+other pension...surely it's the total which matters.....the net effect of fiscal drag is that both might well be dragged into paying tax.

Anyone today on £8814pa (max BSP) and say £3700pa in "other" pensions (so £12514 total) is above the pension credit threshold, and so will lose WFA. In April, they will likely see their state pension rise with the triple lock (looks like being 4.5%) to £9211pa, and their other pension probably by CPI (maybe 2.2%) to £3782pa, for a total of £12993.....hello taxman, who will then relieve them of £85 in income tax........is this what the govt should be doing to older people of limited means?

FIREDreamer

MK62 said:

True, but then does it really matter how a pensioner's income is made up, whether SP alone or SP+other pension...surely it's the total which matters.....the net effect of fiscal drag is that both might well be dragged into paying tax.

Anyone today on £8814pa (max BSP) and say £3700pa in "other" pensions (so £12514 total) is above the pension credit threshold, and so will lose WFA. In April, they will likely see their state pension rise with the triple lock (looks like being 4.5%) to £9211pa, and their other pension probably by CPI (maybe 2.2%) to £3782pa, for a total of £12993.....hello taxman, who will then relieve them of £85 in income tax........is this what the govt should be doing to older people of limited means?

I think this government has already demonstrated its contempt for pensioners.