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Is the future of the state pension triple lock in doubt?

Benefits such as free bus passes, TV licences and Winter Fuel Payments could also be axed

Scrapping the state pension triple lock, abolishing free TV licences for over 75s and axeing free bus passes are just a few of the radical suggestions outlined in a new House of Lords report to tackle the gap in wealth between older and younger generations.

Coming at a time when retired people have higher incomes on average than many younger people, the report – ‘Tackling Intergenerational Unfairness’ – the states that ‘intergenerational fairness should offer the opportunity of a fulfilling life’ – something that younger generations, with stagnant wage growth, poor property provisions and lack of governmental foresight and support are not currently able to enjoy.

Taking into account the fact that one in three babies born today will reach 100-years-old, the report also looks to re-imagine the idea of retirement.

Which? looks at what the House of Lords is proposing, and what the changes could mean for future retirees.


Why might the state pension triple lock be axed?

The state pension triple lock system was introduced by the coalition government in 2010 as a way to ensure that state pension rates would keep up with inflation and wage growth.

It dictates that state pension rates must increase by either the rate of inflation for September of the previous year, the increase in average earnings, or 2.5% – whichever is highest.

The report suggests, however, that these state pension increases are unsustainable, and are actually restricting public spending on services, meaning younger generations are shouldering the costs.

Instead, it proposed the state pension should instead rise in line with average earnings to ensure parity with working people.

In terms of what pensioners can expect if this change goes through, it’s possible that the state pension could rise at a slower rate, as there’ll be no guarantee of a minimum 2.5% increase.

What other state pension benefits could be scrapped?

The report singles out free bus passes – currently sent to over 60s in London, Wales, Northern Ireland and Scotland, and to those in the rest of England at state pension age – free TV licences for over 75s, and Winter Fuel Payment for those born on or before 5 November 1953.

Questioning the fairness of some people receiving free bus passes while they’re still working, the fact that several types of younger households are more likely to be in fuel poverty than those over 65, and why the BBC should have to shoulder the burden of subsidising retirees, the report concludes that these benefits are not working in their current forms.

It instead suggested making the benefits available no sooner than five years after state pension age, and urged the government to see whether it would be feasible to treat such benefits as taxable income – which would mean more retirees would have to submit self-assessment tax returns.

Could National Insurance be paid past state pension age?

The current National Insurance (NI) system sees anyone who continues working past state pension foregoing all NI contributions.

The report concluded it is unfair that NI is only paid by those under state pension age, and would seek to change this.

Where older people are on lower incomes, it suggested they could be protected by aligning the NI contributions threshold with income tax personal allowance.

If that were to happen during this tax year, for instance, it would mean someone remaining in employment past state pension age would only have to pay NI if they earn more than £12,500 – usually, you’d start paying Class 1 NI if you earn more than £8,632.

What other changes have been proposed?

These changes might make for grim reading for those soon expecting to reach retirement – but the House of Lords had some suggestions that will benefit older generations, too.

Council tax

The report calls for the confusing council tax system to be reformed in order to mirror the value of the property, and have a method where those with high-value assets and low incomes (this is most likely to be older people) to delay council tax payments until the property is sold or transferred.

Stamp duty

The government has been urged to reform the stamp duty system in order to improve choices and availability of housing for both young families and older people looking to downsize.

Lifelong learning

To address the difficulties faced by the older workforce, the report suggests that the government’s National Retraining Scheme should be extended and scaled up, along with new incentives to help older workers retrain.

How much is the state pension in 2019-20?

If you reached state pension age before 6 April 2016, you’ll get the basic state pension, plus any additional state pension you might have built up.

If you qualify for the state pension on or after 6 April 2016 you’ll receive the new single-tier state pension.

We’ve rounded up how much your payments will go up by:-

  • New state pension: If you’re entitled to the full new single-tier state pension, your weekly payments went up from £164.35 to £168.60 in April
  • Basic state pension: Those receiving the basic state pension got a weekly boost of £3.25 a week – taking the total state pension from £125.95 to £129.20
  • Additional state pension: The maximum additional state pension cap increased from £172.28 per week to £176.41 per week.

For more information, check out our guides on the state pension and how much state pension will I get?

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