A petition is calling for the state pension to be made tax-free (Image: Getty)
Campaigners have launched a fresh bid for the DWP to make the exempt from income tax, with the full new very close to being subject to the levy.
The tax-free personal allowance is frozen at £12,570 a year until 2028, while the full new currently pays £221.20 a week, or £11,502.40 a year, only just over £1,000 away from being taxable.
From April, payments will creep even closer to the threshold, rising 4.1% with the full new amount moving up to £230.25 a week, or £11,973 a year, just under £600 a year away from being subject to the tax.
A petition has been launched on the Parliament website calling for the to be made tax free. The petition states simply: “We want the government to make the tax exempt and not impact the tax threshold. We think it is wrong to tax the .”
If the petition gets 10,000 signatures, ministers will have to provide a response and if the movement can garner 100,000 supporters, the issue may be debated in Parliament.
A similar petition was launched during the previous Government which had over 54,000 signatures. Experts have said that the in line with average earnings metric of the , which would lift the full new just over the threshold for income tax.
As the costs of the continue to rise, many experts are warning that the yearly increase may have to become less generous so the policy can continue to be affordable.
Payments currently go up as determined by the , which mandate an increase in line with the highest of 2.5%, the rise in average earnings or the rate of inflation.
Investment director Edward Maidment, from , explained how economic trends could mean the costs of the policy continue to ramp up.
He said: “Sustained high inflation would pile pressure on the , as state pensions would rise significantly each year, increasing fiscal costs.
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“If earnings also grow strongly, the could rise at an even steeper rate, making long-term affordability a concern. This could lead to calls for reform, such as averaging increases over multiple years or introducing a ‘double lock’ that excludes the 2.5% minimum lock.
“For politicians, trying to balance fiscal sustainability without eroding pensioners’ real incomes could become a key policy battleground.”
If average earnings are lower and inflation is the determining factor, payments would go up 3.7%, if the current predictions for inflation prove to be correct.
People planning to soon claim their may want to check when they will actually qualify for the , as the age is gradually going up from the current 66 to 67, between 2026 and 2028.
The age will increase again from 67 to 68 between 2044 and 2046, although there are reports that ministers are considering bringing forward the timetable for this increase. You can sign the petition .