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The new state pension ‘Triple Lock Plus’ could help people work longer before reaching retirement age

If re-elected, the Conservatives have promised to introduce a ‘Triple Lock Plus’ guarantee, which the party says would stop ‘millions’ of state pensioners from paying tax in retirement. Their plan would see the tax-free personal allowance rise every year in line with the increase in the state pension.

Under this Triple Lock, new and basic state pensions rise by the highest amount each year: average annual earnings growth from May to July, consumer price index (CPI) inflation in the year to September, or 2.5 percent. This ‘Triple Lock Plus’ guarantee would mean the personal allowance is always higher than the maximum rate of the new state pension, which is now worth £11,502 annually.




This currently leaves just over £1,068 (£89 per month) of extra income before pensioners have to pay tax. Currently, approximately 8.1 million (64%) of the total 12.7 million people over state pension age currently pay tax in retirement, largely due to additional income from work or private pensions on top of their state pension benefits .

Pensions experts predict that a further 900,000 people will pass the £12,570 personal allowance threshold during the current financial year, while another 2 million are expected before the freeze ends in 2028.

However, it is important to realize that elderly people whose only income this year is the state pension will not pay tax.

A recent survey of 2,000 people, carried out by Opinium on behalf of Hargreaves Lansdown, found that 54 per cent of over-55s would be more likely to vote for a party that promised to retain the Triple Lock. For retirees it is even higher: 61 percent.

In contrast, more than a quarter (26%) of those over 55 said they would be more likely to vote for a party that said it would not raise the state pension age.

Helen Morrissey, head of pensions analysis at Hargreaves Lansdown, warns that an increase in the state pension age may be likely sooner than expected in a bid to “contain costs”.

The ‘Triple Lock Plus’ will cost £2.4 billion per year by 2029/2030 and will be funded by tackling tax evaders.

Ms Morrissey said: “We are now deep into general election campaign territory and it is clear that the voice of pensioners will prove crucial. We knew issues like the Triple Lock would be decisive.

“The dial has since moved up a notch with the Conservative announcement of the Triple Lock Plus – a plan aimed at ensuring the state pension is not subject to income tax. It’s a promise that will prove popular not only with those who would vote to keep the Triple Lock, but also with those concerned about the impact the frozen tax thresholds have on their income tax bill.

“However, in the quest to preserve the Triple Lock, older voters are faced with the prospect that the state pension age will have to rise to keep costs in check.”

The pension expert continued: “It is the unpleasant dilemma at the heart of the debate over state pensions that is not talked about enough. We know that the cost of the state pension is enormous and borne by a smaller working population.

“In the face of a burgeoning bill, it is likely that the government will use one of its key cost-reducing levers and raise the state pension age. Such a move would prove deeply unpopular with retiree votes; Nearly 40 percent of those over 55 said such a promise could prompt them to vote elsewhere.”

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Ms Morrissey added: “The Triple Lock debate will continue to make headlines, but it is just one piece of a complex jigsaw puzzle that needs to be looked at from all angles.

“Whoever wins the general election must get a comprehensive view of the state pension, including the Triple Lock, to ensure it remains sustainable in the long term and that pensioners have certainty about what they get from the state and when.”

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