"Average Earnings Growth" and triple lock

molerat

Has anyone called an ambulance for BKM ?

michaels

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

FIREDreamer

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

I don’t know if it’s too political to make the point that the latter group are more likely to have voted for the current government than the former?

🤣🤣🤣

Dazed_and_C0nfused

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

Although you are overlooking the fact that someone receiving pension credit today could have previously paid lots of NI.

But there is no requirement to pay any NI in order to qualify for the new State Pension.  Qualifying years are what matters and there are numerous perfectly valid ways to achieve a qualifying year without paying a penny in NI.

SnowMan

The earnings percentage used for the earnings element of the triple lock calculation has been established through custom to be the July 2025 seasonally adjusted total pay including bonuses figure published today (16th September) of 4.7%. The July 2025 figure is the average of the year on year increase in earnings for the 3 months of May, June and July. 

This July 2025 earnings figure can be subject to a small revision when further earnings data is published on 14th October and 11th November. These publications occur before the budget takes place on 26th November, which is when the triple lock increase is usually announced. For example in 2024 the corresponding July 2024 earnings figure of 4% published in September was revised to 4.1% in October and the triple lock increase was based on this 4.1% revised figure.

So while CPI is unlikely to exceed 4.7% and the earnings element will almost certainly bite, there could still be a small revision to the 4.7%. 

artyboy

At this rate, it will have risen to £25k a year by the time I'm old enough to collect it...

BlackKnightMonty

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

You speak for an entire generation there. But not for the one you think!

Silvertabby

cfw1994 said:

GibbsRule_No3. said:

With 4.7% it does mean more will pay tax, so Government win as well. I cannot see Rachel from Accounts raising the personal allowance.

Without making this political, just as a statement of facts, it might be worth remembering it was “Sunak from Accounts” who froze the allowance back in March Budget 2021 up to and including 2025-26. 

Then in the Autumn Statement 2022 “Hunt from Accounts” extended the freeze by a further two years 😉

Just in case anyone has short memories…

To be fair, the Tory manifesto included the promise that the personal allowance for State pensioners would always be higher than the new single tier pension.  Labour were asked if they would match that promise, but they said 'no'.  

SnowMan

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

Worth remembering that the guaranteed pension credit top up (for a single person) is to £227.10pw for 2025/2026 which is less than the new state pension of £230.25pw (so £3.15pw difference). 

And the guaranteed pension credit rate top up amount will probably go up with prices into 2026 whereas the new state pension increase will be the higher earnings increase. Over time the difference should widen. 

Also it is income net of tax that is taken into account for pension credit purposes. So perhaps that would mean that when the new state pension becomes greater than the personal allowance that a net state pension figure would be used as income albeit the state pension is taxable but paid gross. 

So I wouldn't accept that the normal scenario (or even a common scenario) will be someone who 'has contributed' getting less.

That said it may be possible to construct an example where someone is better off (even now) through not having a full new state pension than having a full state pension. Perhaps a couple where one partner gets the full new state pension and one gets very little state pension and where there are disability or carer elements of pension credit in play and where there are passported benefits such as council tax benefit involved.       

Eldi_Dos

Dazed_and_C0nfused said:

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

Although you are overlooking the fact that someone receiving pension credit today could have previously paid lots of NI.

I would think that applies to industries involving hard physical labour, construction for instance, where peoples high earning years are in their thirties to early fifties after that the work can get too demanding and they seek other work or drop out the workforce.