State pension boosted by 8.5% from this week - will it ever become means tested?
Apr 12, 2024
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Financial experts Tanya Jefferies and Georgie Frost discuss the 8.5% state pension boost, potential means testing challenges, delays in the online pension service, NS&I IT meltdown, a dance teacher's outrageous energy bill, and the curious case of an American Express card with a 704.6% APR.
State pension increased by 8.5% under triple lock commitment, raising future tax concerns.
Potential means testing of state pension prompts debates on cost management strategies.
Comparing state pensions globally offers insights for enhancing UK pension system.
Deep dives
Boost for Pensioners and State Pension Triple Lock
Pensioners saw a boost this week with the state pension increasing by 8.5% due to the triple lock commitment, causing speculation about potential means testing in the future.
Impact of State Pension Increase on Taxation
The rise in the state pension may lead to more pensioners having to pay income tax, with estimates suggesting an additional 600,000 pensioners may start paying tax this year, rising to 1.6 million over the next four years.
Challenges and Debates Around the Cost of State Pension
The state pension, while beneficial, poses financial challenges due to its high cost, leading to debates and considerations about potential changes in eligibility criteria or payment mechanisms to manage costs.
Future of State Pension System and Means Testing
Amid speculation about means testing the state pension, experts like Steve Webb suggest alternative solutions such as raising the pension age, increasing contribution years, or controlling annual increases to manage costs effectively.
International Comparisons of State Pensions
Comparing state pensions across developed countries reveals variations in benefit levels, qualification requirements, and means testing approaches, offering insights for potential enhancements to the UK state pension system.
This year's increase of 8.5 per cent was thanks to the triple lock commitment - a guarantee the state pension will rise each year by the higher of CPI, wages or 2.5 per cent.