UK: Sunak government promises ‘Triple Lock Plus’ pension for elderly

The Conservatives have pledged to increase the tax-free pension allowance through a “Triple Lock Plus” if they win the general election. According to their plan, the personal allowance for pensioners will rise by at least 2.5% or match the highest of earnings or inflation.

Prime Minister Rishi Sunak stated that the scheme “shows we are on the side of pensioners,” estimating a £275 saving for them by 2030. However, Labour criticized the policy as a “desperate move from a chaotic Tory party.”

Currently, the state pension increases by whichever is highest: average earnings, wages, or 2.5%. In April, this resulted in an 8.5% rise. Both Conservatives and Labour support this policy to ensure pensions keep up with inflation and wages.

However, income tax thresholds have been frozen since 2021, and pensions are subject to income tax. The Office for Budget Responsibility predicts that by 2027, the state pension will exceed the tax-free personal allowance, leading to more pensioners paying income tax. Charities like Age UK and Independent Age have reported increased calls from concerned pensioners.

Under the new scheme, the state pension will remain below the tax-free threshold. The Conservatives estimate the plan will cost £2.4bn annually by 2029-30, funded by improved tax collection and measures against tax evasion and avoidance.

Sunak emphasized that those who have worked hard deserve security in retirement. He highlighted that pensions have risen by £900 this year and promised a tax cut of about £100 next year, showcasing their commitment to pensioners. He contrasted this with Labour, whom he accused of potentially forcing all state pension recipients to pay income tax.

Labour’s Jonathan Ashworth accused Sunak of betraying pensioners and criticized the Conservatives for promising unfunded policies. He highlighted the party’s pledge to end National Insurance, a move Chancellor Jeremy Hunt has acknowledged won’t happen before 2030.

Lib Dem Treasury spokeswoman Sarah Olney also criticized the Conservatives, accusing them of imposing unfair tax hikes on pensioners and breaking promises on the triple lock, suggesting people won’t trust Sunak’s new promises.