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Briefing Note 37 - Was Budget 2007 good for pensioners?
Although Budget 2007 did not include any direct changes to the value of state pensions and benefits for pensioners (such as the Basic State Pension, Pension Credit and winter fuel payments) other than those already announced, the Budget will affect the income of current and future pensioners through:
- Changes to the income tax system, which alter the amount of tax paid by pensioners and the amount of tax relief on pension contributions.
- An increase in the National Insurance Upper Earning Limit (UEL), which could change the future build-up of State Second Pension (S2P)
This Briefing Note examines who might gain or lose from these proposals, and the potential long-term implications for pension provision. It finds that tax changes will help middle and higher income pensioners and save the Exchequer around £250 million a year. The increase in the UEL could increase S2P for higher earners.
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