George Osborne delivered his Spending Review and Autumn Statement on the 25th November last year.
In this statement the Chancellor did not announce any radical changes to the private pension system, for the first in this Parliament. He did however set out proposals for other areas regarding pensions which are detailed below.
The full changes will be understood in the March 2016 Budget.
New Basic State Pension
The new basic state pension will increase by £3.35 to £119.30 a week on April 6, the biggest rise in 15 years.
A New Flat-Rate Pension Will Be Implemented
There will be a new flat-rate pension set at £155.65 a week for anyone who reaches state pension age on or after April 6 next year. For someone working full-time today this equates to approximately 60% of the living wage.
The new flat-rate pensions aims to eliminate the current, complicated systems in which people receive a basic pension as well as extra payments based on their NI contributions.
A planned increase in the minimum pensions contributions employers would have to give their staff has been pushed back. The auto-enrolment, originally planned for October 2017 and 2018 will now come into force in April 2018 and 2019 instead.
Changes to Pension Credit
People who claim pension credit will have their payments stopped if they are out of the UK for more than four weeks. This replaces the old limit of 13 weeks.
The State Pension Age Will Rise
From 2020, the state pension age will be 66 for both men and women. This will increase to 67 between 2026 and 2028, and will be then linked to life expectancy after that.
ISA Allowance Frozen
The ISA allowance will be frozen at £15,240 and at £4,080 for Junior ISAs.
Are You Confused About Pension Changes?
If you are confused about the changes in pensions, or are unsure what the best saving vehicle is for you and your family, you should speak to a financial adviser who will be able to explain the possible options available to you.
Maxim Wealth Management are an independent financial advice company, with offices in Glasgow and London, covering the whole of the UK. To discuss your pension or retirement please contact us today:
Glasgow: 0141 764 0040
London: 0203 841 9941