The conservative party has announced a plan for a ‘triple lock plus’ pension which is meant to place pensioners in a beneficial position if they win the general election.

They have promised tax cuts for pensioners with a triple lock plus, this would be a £2.4bn tax cut.

 

Triple Lock pension

Currently State pension rises in line with highest earnings or inflation or 2.5%, whichever is highest. This allows pensioners to have an increased income as the cost of living increases. The current system should see state pension rise by £430 by next April.

The new announcement will allow pensioners to get a personal tax allowance which will rise in line with triple lock meaning the tax allowance will always be higher than state pension. This will give pensioners an exception from paying income tax which many were concerned about when the state pension increased.

The triple lock currently meant that pensioners could have to pay income tax as the state pension rose to just below the income tax threshold. Any pensioners receiving the state pension as well as a personal pension could easily hit the tax threshold meaning they would be losing their money on an already typically small income.

This plan is expected to save 8m pensioners around £100 next year and up to £300 a year by 2030.

Implementing tax cuts for pensioners allows them to keep hold of their income, a policy which the conservatives introduced for pensioners to pay income tax is now being frozen in the lead up to the election.

Funding

The triple lock will be funded through their plan to raise around £6bn a year by clamping down on tax avoidance and evasion.