Triple lock increase for April 2027 is 3.9% (probably)

twopenny

Zagfles now that sounds reasonable and simple enough to be understood by most.

Albermarle

From BBC News this morning.

Almost 13 million people receive the state pension in the UK. If it does rise by 3.9%, it would take the flat-rate state pension above the personal allowance of £12,570 and therefore be liable for income tax.

The Labour government - when Rachel Reeves was chancellor - promised that pensioners who rely solely on the state pension would not be required to complete a tax return, nor be chased to pay.

However, when asked by the BBC on Tuesday, Business Secretary Jonathan Reynolds refused to confirm that pensioners reliant on the state pension will be exempted from paying income tax.

Asked by BBC Breakfast whether he could reiterate that commitment, he said: "The vast majority of people in Britain have their own private pension provision alongside the state pension so this wouldn't be a substantial change for them, they'd already certainly be receiving an income in that case above the personal allowance.

"Any changes to personal allowances, to tax rates, take place in the Budget, that's on October 28."

He was repeatedly asked to confirm the previous pledge, but again pointed to the Budget.

Analysis by consultants LCP suggested that only one in 16 pensioners would benefit if the government kept to its previous pledge, saving about £91 each a year. The majority of pensioners have additional pension income and so pay income tax already.

zagfles

It's the usual game governments play in the run up to budgets. Stoke a bit of fear, get the media frothing about broken promises and unfair anomalies, then come up with a "solution" at the budget that they probably had planned for ages anyway (eg pensioners tax allowance) which proves they "listened" and all the media stoked fears were unfounded. Then they can sneak in other more significant changes unnoticed.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82137056#Comment_82137056

Interestingly the PM has said the frozen personal tax allowance came up a lot on the doorstep in the Ashton in Makerfield by election. So maybe a universal increase to £13,100 a year could be another solution being thought about ( but a lot more expensive one ) .

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/82137056#Comment_82137056

The cricketing term they seem to have adopted is 'pitch rolling'. They probably need to do something a little bit different/more radical or else the pattern set by the leadership continues and then it won't take long for the current PM to face similar observations. A £2 bus fare isn't going to cut it!

It always makes me chuckle when people say "They said x, so they can't/won't do that" when the goal posts are constantly moving. I think the 20% rate will move ahead of 2031, whether it is under this government or the next one. But back on topic, the Triple Lock is the one to scrap at some point, it depends who is brave enough.

GunJack

Scrapping the triple lock would seem the far more sensible thing to do if the government want to save money. Public sector/civil service/NHS etc pensions in payment only go up by CPI, so why shouldn't state pension (along with most other state benefits)?

..and before anyone takes exception I have 20 years of deferred CS pension to come so do have a direct interest.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82137118#Comment_82137118

the argument would be that while the triple lock is not sustainable long term, the state pension is also not yet at an appropriate income level.

So even if you removed triple lock and just had a higher state pension tied to earnings or perhaps % of minimum wage - it’s still be above a personal allowance frozen for another 5 years.

a pensioner personal allowance but not giving the same to workers would cause a stink I think - three locks not enough now you’re making it tax free too? If you only pay it back with a private pension that should be enough

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82137128#Comment_82137128

Why? There was a pensioner's tax allowance for several decades until it was abolished in 2015, and I don't remember any "stink" about it. There was a "stink" about abolishing it though.

Keeping the triple lock will benefit today's workers more than anyone because it'll raise the state pension year on year so it'll be at a decent level when they eventually get there. As to affordability - tax revenues increase with earnings, and earnings is the most likely element of the triple lock to be used as it's usually higher then 2.5% and CPI, life expectancy has plateaued in recent years, the state pension age is rising, so it could become more affordable in future than it is now!

Andy_L

https://forums.moneysavingexpert.com/discussion/comment/82137128#Comment_82137128

What is the appropriate level of income for the SP?

The Turner pensions review that preceded the introduction of the triple lock by 5(?) years as well as saying:

Raise pension age (done)
Go back to wage indexation (sort of done)
Create something like NEST (done)

also said that the goal should be that the combination of SP and NEST should be about 50% of average income.

So about £19k between the 2 in today's money

Linton

https://forums.moneysavingexpert.com/discussion/comment/82137118#Comment_82137118

Scrapping the triple lock and only increasing SP by inflation would be a minor hit for current recipients and hence would save relatively little money in the short/medium term.

The people who would be seriously affected would be those retiring in say 20 years time by when (hopefully) wages are likely to have significantly outstripped inflation making SP a smaller component of retirement plans. People without significant private pensions would be left in unacceptable relative poverty.

That was what happened after the wage link was removed by Thatcher in 1980 and led to the reorganisation of SP 10 years ago.