Pensions

**NB** Most of the information below will not affect pensioners who are already in receipt of a state pension, but there are points of interest to note for all pensioners; (and any family they may have yet to receive a state pension); so I thought it worthwhile to put in the newsletter just for your information.

A new State Pension is being introduced which will apply to people reaching State Pension age from 6 April 2016 onwards. This will only affect:

Women born on or after 6 April 1953

 Men born on or after 6 April 1951

 What if I am already claiming my State Pension or will reach State Pension age before 6 April 2016?

The current State Pension will continue for those who are already claiming it and those who reach State Pension age before 6 April 2016. It’s the date that you reach State Pension age that’s important –not when you start to claim. If you are unsure about the date you reach State Pension age, you can contact the Pension Service to find out (see below) or go to www.gov.uk/calculate-state-pension.

For example, if you reach State Pension age before 6 April 2016 and chose to defer your State Pension, you will still be subject to the current rules rather than those applying from 6 April 2016 onwards.

Why is the new State Pension being introduced?

The existing system is complex, has high levels of means-testing and produces inequality –for example, women tend to have lower State Pensions than men, and in some cases women, carers and self-employed people haven’t previously received much by the way of additional State Pension, and are likely to benefit from the changes.

The aim is to introduce a simpler, fairer system in which people have a clearer idea about what their State Pension will be, making it easier for them to plan their retirements.

When the new State Pension is fully introduced it will have the following features.

It will be a single weekly amount. The full amount has been set at £155.65 for the financial year 2016/17.

However, the amount you receive will take into account the National Insurance (NI) contributions you have already made, so you may get more or less than this full amount, depending on your individual circumstances.

The full amount will be given to people with at least 35 years of NI contributions or credits. Those with between 10 and 34 years of contributions will receive a proportion of it. Anyone with less than 10 years of contributions will not be entitled to any amount.

For most people, this will be based on their own NI contribution record, unlike the current system where it is possible to use the contribution record of a spouse, civil partner, ex-spouse or deceased spouse. There are some exceptions, such as if you paid reduced-rate NI contributions (commonly known as married women’s stamp); if this applies you should contact the Pension Service for more information (see below).

Pension Credit and other means-tested benefits will continue to provide a safety net for people with low incomes, but the savings credit element of Pension Credit will be abolished (it will remain for existing claimants).

How will the changes affect individual entitlement?

As mentioned above, the new State Pension will be based on your own NI contributions and (in general) you will not be able to claim on your spouse’s or civil partner’s contributions at retirement or if you are widowed or divorced.

However, if you’re widowed you may be able to inherit part of your partner’s additional State Pension that has already built up.

There is also provision under the new system for women who paid the reduced-rate ‘married woman’s contributions’ (commonly called the ‘married women’s stamp’) to use these contributions towards the new State Pension.

If you think these issues affect you, then you can contact the Pension Service for more information (see below).

•  How will my new State Pension amount be worked out? This will be the higher of:  Page-3When working out the ‘starting amount’ calculation, a deduction will be made if you have been in a ‘contracted out’ personal or workplace pension scheme –for example, if you have been a member of a public-sector pension. In this case you will have paid NI contributions at a lower rate because you were paying into a contracted-out pension instead, or some of your NI contributions will have been paid into your private pension instead of going towards your additional State Pension. If your ‘starting amount’ is less than the full amount of the new State Pension you may be able to build up more pension for any years of contributions or credits between 6 April 2016 and when you reach State Pension age.

 

• Remember, to receive any amount of new State Pension you will need a minimum of 10 qualifying years on your NI record.
• If your ‘starting amount’ is more than the full amount of the new State Pension, any amount over that level will be protected and paid in addition to the new State Pension when you start to claim it.
• The amount you would get if the new State Pension had been in place at the start of your working life.
• The amount you would have received under the current system, including basic and additional pension elements.
• As mentioned above, you may get more or less than the full amount depending on your NI contributions. As most people claiming the new State Pension will have already built up NI contributions under the old system, their amount will be calculated under transitional arrangements and they will be given a ‘starting amount’.

Personal Savings Allowance

Earn up to £1,000 savings interest tax free

**NB** From 6 April 2016, most UK adults will be able to earn up to £1,000 interest a year on their savings without paying tax on it. This is the biggest savings shake-up for a generation, meaning 95% of people won’t pay tax on savings.

Currently for every £100 interest earned, basic-rate taxpayers lose £20 in tax, higher rate £40. Yet from 6 April the new personal savings allowance means every basic-rate taxpayer can earn £1,000 interest without paying tax on it, equivalent to the interest on £70,000 in the top easy-access savings account. This doesn’t just apply to savings accounts, it’s for ANY INTEREST from bank accounts, credit unions, building societies or even peer-to-peer lending. And it’ll be automatic; from 6 April you’ll be paid interest gross (i.e., with no tax taken off). Higher-rate taxpayers get a £500 personal savings allowance: but additional-rate taxpayers don’t get any. Here’s the lowdown…

How much is the personal savings allowance?

It depends on what rate of tax you pay:

• Basic-rate (20%) taxpayers – will be able to earn £1,000 interest with no tax (so a max tax saving of £200 compared with now)
• Higher-rate (40%) taxpayers – will be able to earn £500 interest with no tax (so a max tax saving of £200 compared with now)
• Additional-rate (45%) taxpayers: £0 – they do not get an allowance.

The estimate is that it will take 95% of savers out of paying any tax on their savings. See HM Treasury’s factsheet for more information

Silver Line Telephone Friends

If you would like to speak to someone on the telephone (for whatever reason) then they can match you to a Silver Line Telephone Friend who will call you every week.

Please call the helpline on 0800 4 70 80 90 to request a Silver Line Tele Friend.

This line will offer friendship and advice for people in later life; and is free, confidential, and open 24 hours.

•  Savings information collected from Martin Lewis website. You can access this by typing in ‘Martin Lewis’; and this will bring up the website.   Age Scotland/Silver Line Scotland can be reached through their website or by telephoning: 0800 4 70 80 90. Also be aware that not all legislation in Scotland is aligned with the rest of the UK ; so I think that Age Scotland or Silver Line Scotland should be your first port of call, where I’m sure you’d receive any assistance to you need.     Here’s the ‘broken record’ bit: If in doubt ASK!   You’ll never know until your do!
• **NB** I always attempt to put up-to-date, and relevant information into the newsletter (on the Web), and all information comes from what I consider reliable sources. However may I remind all our members that when calling the numbers given, they should always check if the department they call is the correct one; and that this information is indeed the latest version of what’s happening with pensions, benefits etc.
• Website: www.agescotland.org.uk
• All other members’ information was from Silver Line Scotland (Age Scotland). My apology to them also for any misquotes.
• My apology to Martin Lewis for any misquotes.

Provided by Mae Stewart, Editor UNISON Retired members Newsletter, Dundee, Perth and Angus. Please note that this is not definitive information about benefits but will provide a signpost as to where to get up to date information. Please check the sources first. UNISON Scotland can take no responsibility for information that may be outdated or inaccurate.