Letters: ‘Pledge on no tax on pensions is misleading’

As a pensioner, I was interested to hear the manifesto pledges relating to the future taxation of the state pension.

The Conservatives have announced a manifesto pledge which they say will never tax the state pension in the future, by introducing the ‘triple lock plus’ which would  increase the personal allowance for pensioners at the same rate as the state pension – effectively protecting it from tax. The truth is, however, that the state pension is already taxed by default.  

Let me explain my reasoning. If you are lucky enough to have an occupational pension, and are in receipt of the state pension, every time the state pension is increased HMRC take most if not all of the increase in the state pension by increasing the tax burden on the occupational pension – if the combined amount goes above the personal tax allowance threshold.

Ergo that state pension increase is taxed by default, so the Tory pledge is misleading as not ALL pensioners will benefit from the state pension never being taxed, as anyone with an occupational pension (however large or small) will never benefit ‘overall’ from this Tory policy.

I contacted Labour candidate Martin McCluskey via email to gain Labour’s position if they get into power; the silence has been deafening, similar to Labour’s national position. It seems Martin will only respond to questions that ensures he stays ‘on message’ with the party line!

Therefore my proposal to Martin and Labour is to offer a better alternative to the Conservative manifesto position and look at a complete separation of thesState pension from occupational pensions, in terms of earnings when being considered by HMRC for taxation purposes above the personal allowance.

This would then truly result in the state pension never being taxed by default or otherwise, and pledge to make this contingent within the Labour manifesto, and realised in their first term of government, if they win the election.

Come on Martin, your thoughts on this would be welcome to all of your potential state pension age constituents.

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