When do you get the state pension?

time:2023-06-10 21:39:05source:Al Jazeera author:Press center 1

The government has confirmed that the planned state pension age rise will not be brought forward, as had previously been suggested.

The state pension age is due to begin rising to 68 from 2044, but there had been speculation that the change would happen sooner.

In the latest Budget, unveiled in March, the government also announced changes to private pension rules to help encourage older people back into work, but it is not clear how many people will benefit.

The state pension is a payment made every four weeks by the government to people who have reached the qualifying age and have paid enough National Insurance contributions.

In November, the government confirmed that the state pension will go up by 10.1% - in line with September's measure of inflation.

From April 2023 it will be worth:

More than 12 million people currently receive the state pension.

Men and women born between 6 October, 1954 and 5 April, 1960 start receiving their pension at the age of 66.

But for people born after this date, the state pension age is increasing:

There had been speculation, in the run-up to the budget, that the second increase would be brought forward, potentially to the late-2030s.

However, the government has confirmed that it will not change the timetable at the moment. A decision is now expected in 2026, after the next general election.

At a cost of £105bn, the state pension accounts for just under half the total amount the government spends on benefits.

Under the triple lock system, the state pension increases each April in line with whichever of these three measures is highest:

The triple lock was introduced by the Conservative/Liberal Democrat coalition government in 2010.

It was designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the working population's income.

The triple lock was temporarily suspended after the Covid pandemic distorted average wage figures, but it has since been restored.

If they have no other source of income, those above retirement age may also be entitled to Pension Credit in addition to the basic state pension.

Like the state pension, this benefit will also increase by 10.1% from April.

If you get Pension Credit, you may also be entitled to other financial support, including housing benefit, a reduction in council tax, or help with your heating costs through the Warm Home Discount Scheme.

People born before 26 September 1956 are also entitled to the annual winter fuel payment.

In the budget, Chancellor Jeremy Hunt announced various changes to private pension allowances, to help encourage older people to stay in work, or return after retirement.

The lifetime pension allowance is the maximum amount of pension savings an individual can build up over their career without having to pay additional tax. The current £1,073,100 limit was due to remain fixed until 2026.

Ahead of the budget in March, there had been speculation it would be increased to £1.8m, but instead any limit is being scrapped.

The charge will be removed from 6 April 2023, before the allowance is fully abolished from April 2024.

The current allowance applies to private pensions - both defined benefit and defined contribution.

The annual pension allowance is the maximum amount of money an individual can pay into their private pension each tax year without penalty. It is currently £40,000.

Mr Hunt said this will increase by 50%, to £60,000, from 6 April.

If someone goes over the allowance, additional tax charges will apply.

The money purchase annual allowance is also changing.

This applies to those people who have started drawing some of their defined contribution pension, but who want to continue to work and save more.

The allowance is currently £4,000 a year before a tax penalty is triggered, but Mr Hunt is more than doubling that to £10,000 from 6 April.

The lifetime and annual pension allowances have both been cut since 2010, raising about £8bn of extra taxes for the government, according to the Institute for Fiscal Studies (IFS).

The chancellor said removing the lifetime pension allowance would help keep senior doctors in the NHS, and would stop other professionals from retiring early.

But he could not say how many staff would continue working as a result.

Abolishing the lifetime allowance is expected to cost the government about £800m a year from 2025-26, while increasing the annual allowance will cost about £300m a year.

The OBR - the government's independent economic forecaster - have calculated both measures would increase employment by 15,000 workers.

But in its assessment of the budget, the IFS called that estimate "optimistic", and said the changes were unlikely to play a big part in increasing the number of people in work.

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