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Autumn Statement sees triple lock confirmed | AccountingWEB | Image of three padlocks
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Autumn Statement sees triple lock confirmed alongside other pension reforms

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The government has announced in the Autumn Statement that the State Pension will increase by the full amount, 8.5%, under the triple lock system

22nd Nov 2023
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In monetary terms, this means that the full state pension possible is now around £11,502 annually. This will be welcome news for those in retirement, and those soon to be in retirement, as they will need to rely less on their personal and workplace pensions for financial security.

Given the increases in all pension annual allowances in April 2023 and the potential abolition of the lifetime allowance, the income tax relief achievable on contributions still represents an attractive long-term saving route for those still saving.

The downside is that this pushes the state pension to within almost £1,000 of the income tax personal allowance currently set at £12,570 annually, so it will likely mean retirees with other income sources will pay more income tax.

There are questions around the long-term sustainability of a triple locked state pension based on projected national insurance contributions and other tax incomes, according to research by bodies such as the Institute For Fiscal Studies. So it was interesting to see that the government is planning on reducing employee national insurance contributions from 12% to 10% and will remove Class 2 national insurance contributions which the self-employed pay. It is unclear how the increased State Pension will be funded, and whether or not this signals further national insurance contribution or tax rises in the future.

In other pension-related news, the government has announced that it is to consult on a pension “pot for life”, where the employee rather than the employer decides where their workplace pension contributions go.

As a consultation, it doesn’t mean anything is going to happen soon on this front, but there are many potential obstacles to overcome such as how payroll professionals would administer sending employee contributions to multiple providers.

Finally, if you are involved in the running of a small defined benefit pension scheme, the government has announced that it is going to look for these to be consolidated into the Pension Protection Fund. This won’t happen immediately and we can expect further detail to be released over the coming months, with guidance on how this might work.

Visit our dedicated Autumn Statement 2023 hub here to find all related articles from our experts.

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By petestar1969
22nd Nov 2023 17:32

Yay, just what I wanted, carrying on paying other peoples' state pensions......

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