Given that the position of pensioners who have worked and saved for their retirement has deteriorated over the last few years, ( low interest rates, low annuity rates, virtual elimination of private company schemes, etc. ) In retirement find themselves trapped by the claw back of enhanced personal allowances by HMRC. Chancellors are all to ready to trumpet such allowances in budget speeches but fail to mention that most pensioners who have made no provision for themselves have incomes below the personal allowance threshold. Those prudent enough through their working lives to have made personal provision find that the enhanced personal allowances are removed until they are the same as a working person.
These enhanced allowances I assume were intended to recognise the increased costs and reduced incomes faced by pensioners in retirement. Why are they withdrawn at such modest income levels. What message does that send to those in work, not one that encourages self sufficiency.
Legislation must be in place that sets the agenda of self provision in work and retirement as the responsibility of the individual.
Why is this idea important?
Because the removal of the enhanced personal allowances from pensioners when their income exceeds arbitrary thresholds is discrimination on the grounds of income.
Because the award of an increased personal allowance to those in work whilst not treating the pensioner in the same way ( last budget ) is discrimination against the retired. My pension is after all just deferred salary and should be regarded as that.
Removal of the claw-back mechanism would mean most pensioners would not need to engage with HMRC as most retirement income is payed net.
This question of taxation in retirement means that a prudent working life now means that I have a substantial direct bill, how many less prudent people am I required to carry in my retirement?