The future of the Department for Work and Pensions (DWP) State Pension in the UK is facing scrutiny. It is set to increase by £470 a year to reach £11,973 next month. However, this change puts older people close to the personal tax allowance threshold of £12,570. This is the point at which they begin paying tax on their earnings.
As a result, any extra income from private pensions or savings interest could further tip many over this limit. So, there is a real risk that some of the poorest older people could actually be plunged into poverty. That’s why one person is taking action.
A DWP petition over the State Pension
A petition with over 79,000 signatures has emerged. It was started by Dennis Reed on behalf of Silver Voices. This is a campaign organisation advocating for the rights and needs of those over 60. Reed expressed concerns that the freezing of the personal tax allowance could mean older people would find their DWP State Pension subjected to taxation.
“Because of the frozen tax personal allowances, the top of the new State Pension may breach the current personal allowance of £12,570 in 2026” Reed stated. This highlights the potential financial strain this could place on older people.
This petition finds its roots in the story of a 75-year-old widow named Colette. She is eligible to receive a portion of her late husband’s DWP State Pension alongside her own. Yet this year, this combined income exceeded the tax threshold by £1,000, rendering her liable for tax.
Colette also receives a meagre NHS pension of just £37 a month from her time as a GP practice nurse, compounding her financial challenges.
“This is a double whammy on her quality of life in retirement,” Reed noted, illustrating the stark reality faced by many older people who rely heavily on their DWP State Pension to cover basic living expenses.
Broader implications
Moreover, the frozen tax threshold has meant more older people with small private pensions being drawn into the tax system for the first time. This adds to the burden of financial strain they often already endure.
Reed continued to articulate the broader implications of taxing the DWP State Pension:
If the basic State Pension starts being taxed, it undermines the whole principle of a safety net in retirement to ensure that the basic necessities in life can be afforded.
He further cautioned that if the annual increases for the Triple Lock scheme are also taxed, any financial protection is lost.
So, as the DWP confronts these issues surrounding pensions, over 79,000 individuals have rallied behind the petition. You can sign it here.
DWP: not fit for purpose
But the call for change is not just about numbers. It’s about the genuine welfare of older people. They have contributed their entire lives contributing to a DWP system intended to support them during their later years. But now, it’s failing them.
With the UK economy on the ropes, the situation for older people like Colette shows the unfairness of the current pension system. That, coupled with the ongoing WASPI women’s pensions scandal and the government’s plans to cut chronically ill and disabled people’s benefits by £6bn, shows the DWP once again not being fit for purpose.
Featured image via the Canary
