Increase in state pensions projected to keep retirees barely below personal income tax limit
The Labour government has confirmed its commitment to the Pensions Triple Lock, a policy first introduced by the Coalition Government in 2010. Pat McFadden, the Work and Pensions Secretary, announced this during a press conference, reaffirming the government's election manifesto promise.
Under the Triple Lock Policy, the basic and new State Pension are uprated every year by earnings growth, inflation, or 2.5%, whichever is highest. This year, the new State Pension will see an increase, rising to £12,534 per year starting next April. This marks an increase of more than £560 a year.
However, the exact figure will not be confirmed until the newest inflation figures are published in October. If the increase matches the current wage growth of 4.7%, it would bring the annual State Pension to approximately £12,535. This could potentially leave many pensioners extremely close to the basic rate income tax threshold of £12,570.
The Triple Lock Policy has been a subject of great discussion, with some claiming it unfairly subsidizes older people's incomes at the expense of the younger generation. Critics argue that the policy puts an additional burden on the Government, especially considering the already burgeoning State Pension bill.
McFadden stated that the Labour government is committed to maintaining the Triple Lock for the course of this Parliament. He emphasized that the commitment to the UK's pensioners includes this policy. The Labour government has also promised to honour this commitment in their election manifesto.
Inflation, as announced this morning, remains at 3.8%. If the State Pension increase matches the current wage growth, it would add further pressure on the Government. However, the Labour government remains steadfast in its commitment to the Triple Lock.
Despite the controversy surrounding the policy, the Triple Lock has been a cornerstone of pension provision in the UK for over a decade. The Labour government's reaffirmation of its commitment to the policy indicates a continued focus on supporting the UK's pensioners.
