TPAS Newsletter - December 2011
Basic State Pension Increasing to £107.45
The Government has announced the Basic State Pension (BSP) will increase in April 2012 by 5.2%, the rise in the Consumer Price Index (CPI). The full BSP will rise by £5.30 to £107.45 per week.
The BSP is increased each April using the increase in earnings, CPI or 2.5%, whichever is highest. The increase is applied in the first week of the new financial year, normally on the first Monday.
Other state benefit and tax rates/allowances from April 2012 include:
- Category B pension - £64.40 per week
- Pension Credit threshold (single) - £142.70
- Pension Credit threshold (couple) - £217.90
- Class 2 (self-employed) NIC - £2.65 per week
- Class 3 (voluntary) NIC - £13.25 per week
- Income Tax personal allowance (under 65) - £8,105 per annum
- Income Tax personal allowance (65 to 74) - £10,500 per annum
- Income Tax personal allowance (75 and over) - £10,660 per annum
State Pension Age Increase to 67 To Be Bought Forward 10 Years
The last few months have seen the Government introduce State Pension Age (SPA) changes that bought forward the increases to 65 and 66.
The Government has announced that the planned increase to 67, which was due to start in 2034, will now start in 2026. No mention has been made of the increase to 68, which is currently due to start in 2044, but is expected that this will also be brought forward.
Under the new proposals, people born on or after 6 April 1960 but before 6 April 1961 will have an SPA between 66 and 67. People born on or after 6 April 1961 will have an SPA of 67 or higher.
Further details will appear in this newsletter and on our website as they are released by the Government.
Public Sector Change To CPI Ruled Lawful
Earlier this year the Government introduced a change to the way public sector pensions increase. From April 2011, increases are linked to the Consumer Price Index (CPI) instead of the Retail Price Index (RPI). Historically, CPI has usually been less than RPI.
A legal challenge by the Civil Service Pensioners' Alliance and six public sector trade unions has this month failed. They claimed the change was unlawful. But the High Court has ruled that the Government's decision to change from RPI to CPI was lawful. The judgement said "the use of RPI has in the past been merely current practice. Looked at objectively it could not properly be asserted therefore that any promise of its continued use had to be assumed".
Updated! Spotlight On...
We have re-launched our factsheets. There are 15 in total, with more to follow soon.
- The new drawdown rules (SPOT001)
- The new flexible drawdown rules (SPOT002)
- The new drawdown rules for people already using drawdown (SPOT003)
- Changes to the annual allowance (SPOT004)
- Income drawdown v annuity purchase (SPOT005)
- How to test pension savings against the annual allowance (SPOT007)
- Getting financial advice (SPOT009)
- Using a redundancy payment to pay into a pension scheme (SPOT010)
- The change from RPI to CPI (SPOT011)
- Death benefits - taking small pots as a lump sum (SPOT014)
- Paying voluntary NI contributions - the extended rules (SPOT015)
- Tax and lump sums paid on death - defined benefit schemes (SPOT016)
- Tax and lump sums paid on death - defined contribution schemes (SPOT017)
- Tax and lump sums paid on death - income drawdown plans (SPOT018)
- Fixed protection (SPOT019)
We hold a live online Q&A session on the second Wednesday of every month. During the session, our experts will answer any pension related questions you may have.
The next live online question & answer session is on Wednesday 11 January 2012 between 2pm and 3pm.
If you have any pension questions, please feel free to contact us by calling our helpline on 0845 601 2923, emailing email@example.com or writing to us at 11 Belgrave Road, London, SW1V 1RB.