MILLIONS on the state pension are set to get a pay rise within months and we reveal the key date to circle in your diary.
The Government confirmed that rates will increase by £473 in April due to the triple lock remaining in place.
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Chancellor Rachel Reeves first revealed that state pension payments will be going up will be going up by 4.1% in her inaugural Autumn Statement.
Pension Credit will also increase by the same amount.
The amount pensioners get from the state rises every year to keep up with the cost of things like food and household bills.
The triple lock system sees the state pension rise in line with whatever is highest out of: wages for May to July, 2.5% or September’s inflation figure.
Growth in employees’ average total pay was 4.1% in the three months to July, while the UK’s rate of inflation fell to 1.7% in September.
It means pensioners on the new state pension will be looking at as much as £473 a year.
This is up from just over £11,502 to £11,973 a year, and a weekly rise from £221.20 a week to £230.31.
However, the rise will be largely wiped out by the government’s decision to restrict the Winter Fuel payment to pensioners on Pension Credit.
It’s important to note that this is for those entitled to a “full” new state pension – not everyone will receive the full amount.
How much individuals get is based on the number of qualifying years they’ve accrued.
Older pensioners who retired before April 2016 will get a weekly rise from £169.48 to £176.45, and an annual rise from £8,812.96 to £9,175.61.
Other elements of the old state pension system, mainly “additional” state pensions such as SERPS, will rise in line with the increase in CPI inflation for September 2023 which was 6.7%.
Pension credit will also go up by the same amount as the pension.
Retirees on a low income can get it topped up via Pension credit.
Guaranteed pension credit payments will go up from £218.15 a week to £221.86, or £332.95 to £338.61 for couples.
You may also get the “Savings Credit” part of pension credit if both of the following apply:
- You reached state pension age before April 6, 2016
- You saved some money for retirement, for example, a personal or workplace pension
This part of pension credit will rise from £17.01 a week to £17.30 or for couples, from £19.04 to £19.36.
There are also top-up amounts, for instance, if you’re caring for someone else or are disabled.
You can find out more about Pension Credit including how to apply in our guide.
When will you see the boost?
The Department for Work and Pensions confirmed both state pension and pension credit will rise from April 7 – the first Monday after the new tax year begins.
It means pensioners on the new state pension will be looking at a boost of as much as £473 a year from that date.
But a code in your National Insurance (NI) number tells you the exact date you will see payments increase.
This is because the number dictates what day you receive your pension money.
State pension is paid every four weeks and the day you’re paid usually depends on the last two digits of your NI number.
If the digits are between 00 and 19, you are paid on a Monday.
It’s Tuesday if they’re between 20 and 39, and Wednesday if the digits are between 40 and 59.
Numbers 60 to 79 are paid on a Thursday and numbers 80 to 99 are usually paid on Fridays.
As an example, if your NI number ends in 65, you could see your payment rise on April 11, if that’s the time of the month you usually get paid.
Bear in mind, that state pension is usually paid every four weeks, so if you are expecting a payment between April 1 and 5, you might not actually see your pay rise until early May.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 – but it’s due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
How much state pension will I actually get?
The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life.
If you have made at least 35 years of qualifying NI contributions, you may qualify for the maximum amount, outlined above.
The same is true if you have received equivalent credits on your NI record for raising children or providing care.
If you don’t have 35 years, you may be able to top up your record by paying in voluntary NI contributions.
To get the full basic state pension you will need 30 years of NI contributions or credits.
To get any state pension at all, you will need at least 10 years on your NI record.
State Pension boost comes with a catch
By Laura Purkess, consumer features editor and consumer champion
Pensioners are set to see yet another bumper rise to their state pension next year thanks to the triple lock mechanism.
But while the latest rise is positive, it’s important to remember that these increases are intended to simply keep the state pension in line with rising living costs.
So, for most pensioners, it won’t have a material impact on their living standards – it should just keep them roughly the same.
This year in particular, the rise may not have the desired impact for millions of pensioners as the winter fuel payment is set to be axed.
While pensioners are set to see a hefty £473 rise next year based on rising wages, for millions of those people this will largely just offset the loss of up to £300 – so they will actually be worse off.
Experts have also repeatedly warned that the amount paid out is generally not enough to give most pensioners a comfortable retirement.
It’s more than vital than ever that those relying on the State Pension ensure they are claiming any extra benefits they are entitled to.
What age do I get the state pension?
In response to rising life expectancy, the age at which you become eligible to receive the state pension has been going up.
The age is now 66 for both men and women and is set to reach 68 by 2039.
You won’t automatically get the state pension – you need to claim it once you’re eligible.
You should receive a letter no later than two months before you reach state pension age, explaining what to do.
You can find out more here.
You can choose to defer getting the state pension – you don’t have to take it as soon as you are eligible when you reach state pension age.
Leaving your state pension untouched can boost the amount you eventually get.
If you opt to defer your state pension, your entitlement increases by the equivalent of 1% for every five weeks you do so.
As the state system can be tricky to navigate, a key part of any pension planning involves requesting a state pension forecast.
This will help you get your head around how much you could be eligible to receive, and from what age.
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