Prime Minister Andy Burnham and Chancellor John Healey have committed to not taxing state pensioners who rely solely on the new state pension with no other income, according to a new survey. The pledge means that nine per cent of retirees who are entirely reliant on the benefit will be spared HMRC bills.
The commitment follows a Hargreaves Lansdown poll which found that two in three people expect to rely on the state pension in later life. The survey also revealed that one in five described themselves as heavily dependent on it, while 68 per cent of women reported some level of reliance compared with 64 per cent of men.
Tax policy for pensioners
The policy, previously confirmed by former Chancellor Rachel Reeves, was reaffirmed by Mr Burnham and Mr Healey. Mr Burnham, the Makerfield MP, replaced Ms Reeves in No11 as part of his first Cabinet shuffle.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "The state pension forms the very foundation of our retirement income, 66 per cent of people admit they will rely on it 'to some extent'."
Ms Morrissey added: "The level of reliance differs, with nine per cent saying they will be totally dependent on it while a further 19 per cent say they will rely heavily on the benefit to meet their needs in retirement."
State pension value and future changes
Ms Morrissey noted: "The state pension continues to do most of the heavy lifting." A full new state pension is currently £241.30 per week. While this will be sufficient for many people to cover their essentials, for the vast majority it will be nowhere near enough to live the lifestyle they enjoyed while they were working.
The age at which you receive the state pension is currently on the rise and is expected to hit 67 in 2028. It is then expected to start rising to age 68 between 2044 and 2046.
