Triple Lock guarantee broken and taxes to rise

Tax-saving-financial-expe
Tax-saving-financial-expe
Adele-Cowgill-Chartered-Independent-Financial-Adviser

Article by Adele

If you haven’t heard already, the government announced that it “temporarily” breaking its triple lock guarantee to pensioners – blaming Covid -19 for the change.

The government had previously promised to increase state pensions by the higher of average wages or inflation in order to protect pensioners from falling behind and effectively becoming comparatively poorer. However, with wage increases looking like being up to 8.8%, the government baulked at such a big increase in the state pension. It blamed the pandemic for pushing wage inflation to artificially high levels and so it has set the increase at inflation or a maximum of 2.5%. What this means is that the triple lock has gone and been replaces by this new double lock, although the government says that the change is temporary.

Interestingly it seems that most MP’s have gone along with the changes, rather than defending pensioners rights. The thinking seems to be that pensioners shouldn’t be seen to be getting such significant increases especially when large numbers of workers have been on 80% pay through the furlough scheme. Perhaps they need a pension advisor?

The announcement also coincided with the government increasing National Insurance Contributions and Dividend Tax rates by 1.25% to pay for funding for Social Care. Although it seems that the estimated £12 billion being raised through this tax increase is not all going into Social Care. A large chunk is going into extra funding for the NHS to address the pandemic induced backlog in treatments.

So, the summary is that government has broken two of its manifesto promises in one go. First breaking the triple lock on pensions and second not to increase taxes or national insurance.

Paying for the costs of the pandemic are being blamed for both.

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