The idea behind “triple lock plus” is that millions of pensioners who are living “tax-free”, should stay that way. This would involve re-introducing a personal allowance for those over state pension age whose threshold would be at the rate of the full state pension.

The immediate impact will be that Conservatives can claim they are lifting pensioners out of the income taxation system. I doubt that those who have devised this idea have any mind but for a pre-election headline and that they underestimate the pensioner’s financial acumen.

Pensioners pay tax and we know it too!

Every time we pay for good and services , we pay tax – typically VAT, but other purchase taxes too, pensioners are not exempt from these taxes, which increase with inflation.

The state pensions payable to older folk may not be taxed , but other forms of income are, including paid work, private pensions in payment and investment income. Those who simply rely on the state pension and tax free drawdowns – for instance using the nil rate savings band or tax-free cash from pension savings are in the minority.

In 2010 just under half of pensioners paid income tax. Over 60% now. That is mainly because the income tax personal allowance for pensioners has been cut by a good 10% since 2010. Proposed policy will undo only part of that cut. https://t.co/jdAslhqGBM

— Paul Johnson (@PJTheEconomist) May 28, 2024

Statement says: “We have cut taxes for pensioners by raising tax thresholds. Average single pensioner…will pay £453 less tax this year than if personal allowance had been uprated by CPI since 2010/11”
Doesn’t look right. Tax free allowance for pensioners is lower than in 2010

— Paul Johnson (@PJTheEconomist) May 27, 2024

And because of the complexity of State Pension and SERPS/S2P, many people get more than the current single state pension. So the claim that the State Pension will never be taxed is flawed from the outset and writes a new chapter in the thick book of pension mis-selling.

Slight problem with the line ‘state pensions will never be taxed’ – plenty of pensioners get more than the standard new figure so could remain above a new age allowance! https://t.co/fzKF9kGOF5

— Steve Webb (@stevewebb1) May 28, 2024

For the vast majority of pensioners, paying income tax is as much part of their lives as purchase taxes.

The average pensioner, and I don’t mean financially sophisticated people, knows very well they pay income tax and that they pay it through PAYE on their private pensions or through their payslip. They are not going to be fooled by this give-away. There is nothing new or special to most pensioners about paying income tax.

“Triple lock plus” is socially divisive

There are arguments for pensioners not paying full NI on their pensions. They are likely to have a full credit for the state pension though a high proportion of NI pays for the NHS which older people use more than others. We accept that pensioners get away without paying NI on their pensions, even though this gives them a special privilege.

But the NI concession is balanced against pensioners not getting further fiscal perks on income tax. Although honing in on being a state pensioner myself, I do not think that the clock ticking past midnight on my 67th birthday should qualify me to pay less tax. Indeed I see income tax privileges for older folk as socially divisive. I’m not the only one

“OK, what if we just abolished the education budget and bought you and each of your friends a Porsche?” pic.twitter.com/WM97GOE2Hy

— Robert Hutton (@RobDotHutton) May 27, 2024

The state should operate PAYE on the state pension!

Arguments that those living purely on the state pension would otherwise have to fill in tax returns, once the state pension exceeds the personal allowance are for the birds. HMRC must have the software to run PAYE on the state pension using RTI.

My hunch was confirmed by Steve Webb – who knows first hand how the State Pension is paid – having set up the new single state pension when Pensions Minister.

The Chancellor’s reported claim in this story is not true. A pensioner who only has a state pension does *not* have to fill in a self-assessment tax return. Their tax is assessed for them by HMRC who simply send out a ‘simple assessment’ tax bill at the end of the year. https://t.co/O39385RzjZ

— Steve Webb (@stevewebb1) May 28, 2024

If it hasn’t – then it should use some of the £2.5bn saved by scrapping this bribe to get a system in place and some more of it as a grant to the DWP to get the backlog of administration errors from the payment  of the state pension  put right.

Not a policy but a bribe

Reducing fiscal drag for pensioners is estimated by the Conservative party to increase take home by £12.50 per month for 8m pensioners, rising to £37.50 by the end of the decade.

These numbers are being disputed

The reason it’s going to cost the Treasury £2.4bn is that the vast majority of the giveaway will be going to people who don’t need it (but are politically important to the Conservative party in the next five weeks).

This is not targeted at those on low retirement incomes but paid to everyone, including the richest pensioners.

It is not just divisive, it is dumb and will be seen by the population as a whole as a bribe to win the grey vote.

There are many better ways of alleviating pensioner poverty than this. The money spent is money not being spent on alleviating the much more acute problem of social care for those in later age who are still waiting for a substantive reform of its financing.

If this “shoot from the hip” policymaking is the result of 14 years of strategic thinking, then I don’t get it. It looks like a last ditch attempt to kick-start an election campaign that has gone horribly wrong and is now heading for populist nonsense including the reintroduction of national service and now a new personal allowance for pensioners.

The contempt for the electorate is clear.

But we aren’t so stupid as to fall for this nonsense.

We want a proper debate around the financing of getting old, not cheap gimmicks like “triple lock plus”.