Chancellor Rachel Reeves’ Budget introduced a raft of tax changes and financial measures that will significantly affect the finances of older people – and unfortunately not for the better.
While we welcome confirmation that the triple-locked state pension will rise by 4.8% from April 2026, some more relief on energy bills, and measures that will lift children in particular out of poverty, there is still a lot in the Budget that will poorly impact older people for years to come.
Chief among these, is the extended freeze on tax thresholds – the point at which you start paying tax - until 2031. For those supplementing retirement income with savings or a small occupational pension, this ‘fiscal drag’ is likely to result in higher tax bills and reduced disposable income as they get pushed into paying tax for the first time. The three-year extension to the freeze will effectively wipe out much of the benefit of any rise in the state pension.
Jan Shortt, General Secretary, of the NPC commented: “This ‘stealth tax’ means millions of older people are going to have to start paying tax for the first time as the result. So, while the Chancellor might have kept her pledge to keep the triple lock on the annual state pension rise, she is set to take any increase back through this extended tax threshold freeze.
“But our real disappointment in the Budget, is that the ‘broad shoulders’ the Chancellor said would be made to deliver for the economy are nowhere in the budget – apart from the so-called ‘mansion tax’ which is a drop in the ocean.
"There are wealthy people, like the Patriotic Millionaires, who are begging to pay more tax, yet the Chancellor appears to be unable or unwilling to take the step.”
“We really need to start the conversation between whether the state pension is a benefit or not and why this government seeks to tax the state pension as a benefit. It is also time that we discussed the fact that two thirds of older people in this country do not receive anywhere near the new state pension and will get a rise of just £8.45 per week from next April.*”
The End Fuel Poverty Coalition (EFPC), which includes NPC, welcomed the modest reduction in energy bills announced in the Autumn Budget, acknowledging that any decrease is positive for households facing continued high costs. The government estimate their actions will reduce energy costs by £150 next April.
However, the EFPC strongly criticised the decision to scrap the national home insulation scheme and cut wider efficiency funding, warning this could leave millions in cold, damp homes for years. They highlighted that the projected bill reduction still leaves costs significantly above pre-crisis levels and expressed disappointment at the lack of a social tariff to support the most vulnerable. The EFPC called for more ambitious government action, including energy pricing reforms, targeted support, a new fuel poverty strategy, and increased investment in home upgrades, while noting concerns over a significant future shortfall in energy efficiency funding.
Alongside tax rises, the government’s aim to increase fiscal headroom has raised concerns about future funding for the NHS and social care with increasing privatisation and nothing circulating in the UK economy because profits are in offshore banks. If spending cuts or insufficient allocations occur, older people may face reduced access to vital care services and support. Already there are patients in hospital who could be discharged but there is no service available to ensure they are safe and cared for. Meanwhile, persistent inflation and rising living costs will disproportionately impact those on fixed incomes, such as pensioners, especially if state pension increases fail to keep pace with inflation.
*The State Pension will rise by 4.8% in April 2026. The full new State Pension (post 2016 retirees) to £241.30 per week, an increase of about £575 per year. The full basic (old/pre-2016 retirees) State Pension is expected to rise to £184.90 per week. An increase of £8.45 per week - annual increase: £439.40.
The NPC has submitted their response. We would like to thank the TSSA Retired Members Branch for their support. It goes without saying that if you are in a Defined Benefit Scheme, you need to keep
The government is changing legislation in terms of access to schemes in ‘surplus’ to give funding to employers. We have already made strong representation in terms of the rights of scheme members and
