Thank you to all those who contacted me about support for pensioners.
I note that the Government has stated on several occasions that it has no plans to make the State Pension tax-free. Ministers argue that it has been a longstanding policy, under successive administrations, that benefits such as the State Pension count as income for tax purposes. For this financial year, the tax-free Personal Allowance is currently set at £12,570. This means that pensioners whose sole income is the new State Pension or basic State Pension do not pay any Income Tax.
I do not support lowering the retirement age to 60. However, I believe in the triple lock and want to see it continue. At the same time, it is important that all spending commitments are fully costed. I am, therefore, concerned that the Government has raised the idea of abolishing National Insurance contributions without setting out how it would pay for this. Ending National Insurance contributions would either leave a £46 billion black hole in resources for funding state pensions and the NHS, or, if the Government plan is to merge income tax and NICs, it would see pensioners facing tax increases that could wipe out the gains from the triple lock over the last 14 years.
I am, moreover, concerned that one in five pensioners continues to live in poverty. In my view, this shows the importance of Pension Credit, which is intended to provide support for pensioners on very modest incomes. I worry that the current Government is failing to encourage sufficient take-up of this important benefit. The former Pensions Minister, speaking in October 2022, conceded that the take up of Pension Credit has been too low. Indeed, official figures show that over a million pensioners who are entitled to it are not claiming it.
I believe it is wrong that so many pensioners on lower incomes are missing out on this vital financial help. I want to see the Government do much more to make people aware of Pension Credit and to encourage far greater take-up of it. A clear action plan to do this is needed as quickly as possible.
