Pensions - Articles - State Pension Age income tax payers rise by over 1 million

David Brooks, Head of Policy at Broadstone, commented: "The State Pension remains the bedrock of retirement income for many pensioners and is a vital protection against poverty in later life. As the value of the State Pension continues to increase, it is inevitable that more pensioners will pay Income Tax. While this may feel unfair to some retirees whose income comes largely from the State Pension, taxation is increasingly becoming the most cost-effective way for government to distinguish between those with more and less retirement income while preserving the universal nature of the State Pension.

 

Pensioners are not a uniform group and, while some rely heavily on the State Pension, many benefit from occupational and private pension savings built up over decades. The policy challenge should not be preventing pensioners from ever paying tax, but reducing pensioner poverty and ensuring support is targeted at those who need it most.

 

“For example, Pension Credit continues to provide an important safety net for those on the lowest incomes and remains a key tool in tackling hardship in retirement. However, hundreds of thousands of eligible, low-income pensioners are missing out on this vital additional financial support.

 

“As State Pension costs continue to rise alongside an ageing population, the Government must balance maintaining adequate retirement incomes with the need to ensure the system remains sustainable and fair to all taxpayers."