A retired civil servant with four decades of service has branded a new state pension tax exemption as "age discrimination", highlighting a growing rift between recipients of the old and new state pensions.
Four Decades of Service, Then a Tax Demand
Sandra Wrench, 74, from Bedford, dedicated 40 years to the Department for Work and Pensions (DWP). Despite her long career within the very department that administers benefits, she has now been landed with an annual tax bill of £1,633 on her old state pension. Her case emerged following Chancellor Rachel Reeves's recent budget announcement, which confirmed that pensioners whose sole income is the basic or new state pension will not have to pay tax on it.
'A Grossly Unfair Anomaly' for Older Pensioners
While the move aims to simplify life for some, Sandra Wrench told The i Paper it creates an unjust divide. She argues it penalises those, like herself, who receive the "old" state pension and may have a small additional income that pushes them over the tax-free personal allowance threshold.
"I think it's unfair," Wrench stated. "It's effectively age discrimination. Why should some people be exempt from paying tax, whereas others who are older and have the old state pension, are not exempt?"
She expressed concern for those who will struggle to pay, noting: "I'm not struggling to pay the tax, but I worry there are people who will struggle. There will be people who also have a very small occupational pension, so they won't be exempt, and they will still have to pay tax."
Campaigners Call for Threshold Reform
Dennis Reed, director of the Silver Voices pensioner campaign group, supported Wrench's view, calling the situation "a grossly unfair anomaly which we will be campaigning to change". He argued that the Chancellor's concession had "opened a Pandora's Box of problems".
"The only fair solution is to unfreeze the lower tax threshold for all," Reed said. Echoing this, Sandra Wrench suggested a practical fix: "If the Government raised the threshold by £1,000, it could save a lot of headaches for pensioners, and save a lot of headaches for the DWP in working out who has to pay tax."
The issue underscores the ongoing complexity and perceived inequalities within the UK's pension and tax system, particularly for those who retired under previous rules.
