Former pensions minister Baroness Ros Altmann has issued a warning about an “administrative nightmare” that could affect millions.
She spoke on GB News to defend a new pledge made by the Conservatives to raise the tax-free pension allowance via a “Triple Lock Plus” if they win the election.
Labour says the Government’s plan was not “credible”, which Altmann believes is not a fair assessment.
She argues that no intervention from the Government could lead to millions facing problems which they “won’t be able to cope” with.
“It’s a sensible policy decision”, she said.
“I’ve been warning that there is a real danger that millions of pensioners will suddenly be dragged, often for the first time in their lives, into the tax net, which requires them having to make their own tax returns rather than having money deducted at work by pay.
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“They will not be able to cope with it if all they’ve got is the basic or new state pension, and that’s it.
“No private pensions, no other income, then they should not have to grapple with the complexities of the tax system, which can leave them very often facing penalties for not filling in a form that they never knew they had to fill in and didn’t realise that they would be liable for a bit of tax.”
She added: “This would be a real administrative nightmare because suddenly millions more people will be pushed over the frozen tax threshold.
“It’s good news that the state pension is going up, but to force pensioners into the tax net when all they’ve got is their state pension and no other income, we’re not talking about well-off pensioners, we’re talking about the millions of pensioners who have very little to live on for the rest of their lives.”
Ros Altmann has issued a state pension warning
GB NEWS
“We’re trying to make their lives a little bit more comfortable and a little less worrying.”
The Tories vowed to never tax state pension with Rishi Sunak saying the move “shows we are on the side of pensioners”.
The state pension currently rises in line with whichever is the highest - average earnings, inflation or by 2.5 per cent.
In April, the state pension rose by 8.5 per cent.
Secretary of State for Work and Pensions, Mel StridePAThe Tories and Labour are committed to keeping the policy which aims to ensure pensions remain in line with rising prices and wages.
According to the OBR (Office of Budget Responsibility), the state pension is expected to be higher than the tax-free personal allowance.
This would mean many millions of pensioners paying income tax, according to the Tories, which could result in many having to fulfil laborious tasks such as tax returns, which many will not have had to deal with before.
According to Altmann, the policy would ensure this is not the case and should therefore be viewed as a sensible move forward.
Shadow chancellor Rachel Reeves called the scheme a "desperate gimmick".
"The only reason that pensioners are looking for the first time at paying income tax on their basic state pension is because the Conservatives lost control of the economy," she told reporters.
Lib Dem Treasury spokeswoman Sarah Olney said: "The Conservative Party has hammered pensioners with years of unfair tax hikes and broken their word on the triple lock.
"People won't be fooled by yet another empty promise from Rishi Sunak after this record of failure."