Private Pension

zagfles

https://forums.moneysavingexpert.com/discussion/6688690/private-pension

It's correct, that's the way the well designed new "pension tax allowance" works. It's an effective 53.3% tax rate on small private pensions for those who just get the new state pension plus a small private pension.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82187036#Comment_82187036

If you ignore fiscal drag, without which there would be zero tax to pay.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82187668#Comment_82187668

Sure, but the freezing of the personal allowance between 2026/27 and 2027/28 (among all the others) is very old news, announced in 2022, whereas this thread, as with most others just now, is about the new measures introduced by this budget, so the pertinent comparison is what does April 2027 look like this week versus what it would have looked like last week. Obviously the pension tax allowance wouldn't have been necessary at all if it hadn't been for the repeatedly frozen personal allowance but here we are…

Qyburn

https://forums.moneysavingexpert.com/discussion/comment/82187668#Comment_82187668

What did State Pension vs Personal Allowance look like over previous periods, before ththe PA freeze? Just wondering if they kept pace, or whether the pension was always set to catch up, with fiscal drag just speeding it up.

molerat

Looking back to 2011 - 2020 the PA always increased at a greater rate than the SP.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82187949#Comment_82187949

Yes, a big gap built up over that period, which has now been eradicated again with the frozen allowance:

hyubh

https://forums.moneysavingexpert.com/discussion/comment/82187969#Comment_82187969

Out of curiosity, what are the SP index figures before 2016? The 2015-2016 line looks remarkably smooth.

eskbanker

The annual SP increases were much more stable between 2013 and 2022 than some of the years before and after, all between 2.5% and 3.1%, except 2020's 3.9%, and hence the smooth line:

Year	SP index	SP multiplier %
2010	100.0
2011	104.6	104.6
2012	110.0	105.2
2013	112.8	102.5
2014	115.8	102.7
2015	118.7	102.5
2016	122.2	102.9
2017	125.2	102.5
2018	129.0	103.0
2019	132.3	102.6
2020	137.5	103.9
2021	140.9	102.5
2022	145.3	103.1
2023	160.0	110.1
2024	173.6	108.5
2025	180.7	104.1
2026	189.4	104.8
2027	196.8	103.9