Conservatives Unveil ‘Triple Lock Plus’ Tax Cut for Pensioners in Bid for Security and Votes

The conservative group commits to a tax reduction for retirees through an enhanced 'triple lock plus' system.

They vow to raise the threshold at which retirees must pay income tax, asserting that this will provide "peace of mind and security in retirement".

Politics correspondent @NifS

Monday, May 27, 2024, 10:

The Conservative Party has pledged to reduce tax burdens on retirees through the introduction of a new "age-related" tax exemption, referred to as "triple lock plus."

At present, individuals can earn up to £12,570 annually from their pensions without incurring income tax, which aligns with the personal allowance for employed persons.

Should the party secure a victory in the upcoming election, they plan to increase the pensioner's allowance starting next April. The increase will match the highest of the following three: average earnings, inflation, or a fixed 2.5%, mirroring the current policy on yearly state pension raises.

Rishi Sunak stated that the action "shows our commitment to supporting retirees," and will provide individuals with "comfort and stability in their retirement years."

Labour's shadow paymaster general, Jonathan Ashworth, described it as "yet another frantic attempt by a disorganized Conservative party to destroy what's left of its supposed economic reliability."

He continued, "How can anyone trust the Conservatives and Rishi Sunak regarding taxes after they've saddled the nation with the heaviest tax load in seven decades?"

The Liberal Democrats accused the Conservatives of severely burdening the elderly with consistent increases in taxes over the years. They added, "Individuals will not be deceived by another hollow pledge from Rishi Sunak, given his track record of shortcomings."

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The triple lock on pensions was introduced by the Conservative Party during their coalition with the Liberal Democrats in 2010 as a measure against poverty among the elderly. They claimed it would safeguard retirees against the increasing cost of living. Both the Labour Party and the Liberal Democrats have committed to maintaining this policy.

Despite increases in the state pension, the income tax threshold for both retirees and working-age individuals has not been adjusted since April 2021, during Boris Johnson's tenure as prime minister. As a result, lower-income earners are now finding themselves subject to taxation.

This proposed policy aims to ensure that, by law, the personal tax exemption for retirees will consistently exceed the amount of the new state pension.

The Conservative Party has announced that eight million individuals are projected to save approximately £100 annually, with additional savings expected each following year as the tax-free threshold increases. This policy, which costs £2.4 billion annually, will be funded by intensifying efforts to combat tax avoidance and evasion.

During his announcement, Mr. Sunak expressed: "I am deeply committed to ensuring that individuals who have dedicated themselves to a lifetime of work should enjoy tranquility and stability in their retirement years."

The Tories' triple lock policy has led to an increase in pension amounts by £900 this year, and they plan to reduce pension taxes by approximately £100 the following year.

"This decisive move shows our support for retirees. Conversely, Labour's plan would, for the first time ever, subject all full state pension beneficiaries to income tax."

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However, Mr. Ashworth from Labour responded critically, stating: "They have committed to spending tens of billions of pounds throughout this campaign, and they're proposing an entirely unfunded £46 billion plan to eliminate national insurance, which jeopardizes the foundational support of the state pension."

"Labour is committed to maintaining the triple lock. However, Rishi Sunak is set to betray the trust of British retirees, repeating his previous actions towards Boris Johnson and his fellow MPs."

Sunak shifts focus to senior electorate, posing challenges for Labour

Political correspondent

This is yet another audacious and highly politicized statement from the Conservative Party.

Just a few months back, there were talks within Whitehall debating the sustainability of the triple lock, considering its high costs.

Now the Conservatives have shifted their stance, framing a tax reduction for retirees as an enhancement of the costly escalator policy.

The decision could raise concerns about equity across generations, as tax brackets for the working-age population are set to remain unchanged until 2028. Meanwhile, the state pension has increased by 8.5% this year and is set for a 10.1% hike in 2023 due to the triple lock mechanism.

Conservative insiders highlighted that employees have already received a significant reduction in national insurance. They also noted that there are no current intentions to further adjust allowances widely, but they reiterated a commitment to continue reducing taxes in other sectors when possible.

This action is strategic, as it naturally raises speculation about whether the Labour Party will also commit to a similar pledge.

Should they fail to act, anticipate claims of a Labour-initiated tax increase on retirees.

Additionally, given the anticipated increase in the state pension to surpass the existing allowance threshold, the Conservatives are claiming that a Labour administration would lead to all state pension recipients being subjected to income tax for the first time.

The glaring irony in this situation is that such outcomes are primarily due to the tax allowance freezes implemented by the Tories.

Following the recent surge of initiatives focused on national service, it's evident that this move is aimed at engaging the Conservative Party’s traditional older electorate.

Factoring in Rishi Sunak's recent tours of longstanding Conservative strongholds, one might easily infer that the campaign is presently on the defensive.

Interestingly, neither the Labour Party nor the Liberal Democrats have directly criticized the essence of the policy shift, likely conscious of the political dangers associated with opposing tax reductions for pensioners.

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The Conservative Party will target pensioners with their campaign messages, while the Labour Party plans to engage with the business community this Tuesday. Rachel Reeves, the shadow chancellor, is set to deliver her inaugural significant speech of the general election season.

She will commit to leading "the most economically expansive Treasury ever seen in our nation's history" should her party come into power on July 4. She pledges to support both workers and businesses, recognizing that the prosperity of one is intrinsically linked to the success of the other.

Following the endorsement of over 120 business leaders, among them chef Tom Kerridge and Wikileaks founder Jimmy Wales, an open letter has been signed in support of the Labour Party to "realize the UK's full economic potential."

On the campaign trail, the Liberal Democrats are set to focus on crime issues, promising to implement a "burglary response guarantee" to ensure that every home burglary is attended to and thoroughly investigated by the police.

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