Triple lock shock as stealth tax raid leaves OAPS just £20 a year better off
CAMPAIGNERS have vented their fury after analysis showed pensioners will be just £20 better off this year after their triple lock increase was all but wiped out in the Budget.
The Resolution Foundation think tank said Chancellor Jeremy Hunt’s six-year freeze in income tax thresholds will cost retirees dearly.
It said an 8.5% rise in the state pension will leave OAPs £190 better off in the next tax year after adjusting for higher prices.
But this will be offset by the freeze in income tax thresholds, which will cost pensioners £170 – meaning they stand to gain just £20 overall.
By contrast the think tank said a parent earning £60,000 was in line for a net tax cut of £900 because of reductions in National Insurance.
Mr Hunt’s decision to raise the income level at which people are asked to start paying back child benefit to £60,000 will also boost earnings by £1,300. Meanwhile, working
‘Budget penalised pensioners through a sneaky personal allowance freeze’
parents of two-year-olds will start to benefit from 15 hours a week of free childcare from April.
The Resolution Foundation has previously highlighted that eight million pensioners are facing a £1,000 hit from Mr Hunt’s stealth tax raid amid a growing backlash over the Chancellor’s Budget.
It said: “A basic rate tax-paying pensioner will essentially see their above-inflation state pension rise wiped by this April’s personal allowance freeze.”
The triple lock on state pensions ensures payments rise in line with the highest out of inflation, average wage growth or 2.5% each April.
This year the full state pension will rise by £17.35 per week from £203.85 to £221.20, in line with earnings – an increase of 8.5%.
Rishi Sunak has insisted pensioners will get the triple lock for the rest of the decade under Tory rule while Sir Keir Starmer has refused to confirm if it will continue under Labour.
But the foundation says the elderly and higher earners are set to be the biggest losers by the end of this Parliament as pensioners do not benefit from recent NI cuts.
Dennis Reed, director of over-60s campaign group Silver Voices, said: “The Resolution Foundation has correctly emphasised that the recent Budget actually penalised millions of pensioners on basic rate tax by wiping out their cost-of-living increase through this pernicious and sneaky personal allowances freeze.
“We are calling on politicians to promise to lift the freeze on tax allowances on day one after the General Election. That would be a real boost for struggling pensioners and low-paid workers.”
The triple lock was introduced in 2011 by the Coalition Government and applied every year except 202223 due to the pandemic. The Daily
Express has fought to ensure the lock remains in place.
Caroline Abrahams, charity director at Age UK, said of the £20 rise: “This is disappointing, especially for those for whom the state pension is their main or only income, making getting by a continuing daily struggle.” Analysts also highlighted the highest council tax bills on record with average rises of 5.1% in England and 7.7% in Wales.
Steve Webb, a partner at pensions consultants LCP, said the analysis is a reminder that pensioners did not get a “big giveaway” in the Budget.
The former Pensions Minister added: “In the long term the freeze in income tax thresholds will continue to bite hard as it drags millions more pensioners into paying tax.” The Treasury said the triple lock and new state pension meant people are on average £1,000 better off than if the pension had just risen with earnings. It added: “Pensioners do not pay income tax if their sole income is from the full new state pension and we are standing by our commitment to maintain the triple lock by raising the basic state pension to almost £170 a week.”
IT becomes clearer by the day why it was crucial our campaign to save the pensions triple lock succeeded.A new analysis shows pensioners will be only £20 better off on balance, because the freeze in income tax thresholds will cost pensioners £170.
We are proud to have fought to keep the triple lock in place to protect pensioner incomes. It ensures that the state pension keeps pace with inflation and wage growth.
The cost-of-living crisis has been desperately hard for pensioner households, but would have been catastrophic for many without this protection.When income tax is draining their cash, it is vital that this lock remains unpicked. Labour should join the Conservatives in committing to retain it.