MILLIONS of pension savers and retirees will benefit from a raft of changes in April.
From a state pension increase to a scrapped allowance to encourage people to work, there are plenty of changes to keep track of.
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Some of the tweaks were announced last year as part of the Autumn Statement, while others were revealed in the Spring Budget over a year ago.
We’ve rounded up all the changes taking effect this month, and what they mean for your money.
State pension increase – April 8
Millions of retirees are getting a bumper rise of up to £901 a year to their state pension payments, starting this month.
Chancellor Jeremy Hunt first confirmed in his Autumn Statement that pensions will rise by 8.5%, which was reiterated in Spring Budget documents this March.
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The boost kicked in from April 8, 2024.
It means pensioners can get a weekly rise of £17.35 from £203.85 to £221.20 – equivalent to £901 a year.
However, it’s important to note that this is for those entitled to a “full” new state pension.
How much individuals get is based on the number of qualifying years they’ve accrued.
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Older pensioners who retired before April 2016 will get a weekly rise from £156.20 to £169.48, and an annual rise from £8,122.40 to £8,812.96.
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 which was 6.7%.
While the boost is good news for those on a state pension, it could push some into paying taxes for the first time, experts have warned.
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.
Pension credit rise – April 8
Pension credit payments are also rising by 8.5% from April 8, like the state pension.
This means payments will increase from £201.05 to £218.15 for single households.
Pension credit is a tax-free benefit designed to help with living costs if you’re over the state pension age (currently 66) and on a low income.
Around 1.4million pensioners receive pension credit, but 880,000 who could be eligible are not claiming this extra financial help.
It is often described as a “gateway benefit” because even a small award can provide access to a wide range of other benefits.
This can include help with housing costs, council tax or heating bills and is in addition to the extra cost of living payments.
Lifetime Allowance scrapped – April 6
The lifetime allowance (LTA) on pension savings was scrapped on April 6.
It’s the total amount you can save into your pensions without incurring a tax charge.
Around two million middle-class Brits will benefit from the complete scrapping of the £1million threshold, meaning they can put more money into their pension pot before being taxed.
The move is specifically targeted at doctors who leave the NHS early to avoid being trapped by taxes on their savings.
It was first announced in March 2023 as part of the Spring Budget.
However, the Labour Party has committed to reintroducing the LTA if it wins the next election.
The Sun revealed in February that it had also U-turned on other plans to protect certain public sector workers from the charge.
Online state pension top-up system delayed – April
A new online state pension top-up tool has been delayed, after assurances it’d be ready before the tax year ended on April 6.
It’s meant to simplify how you check your state pension and pay for missing National Insurance (NI) credits.
It comes as thousands of people have bought extra credits and boosted their state pension.
The Government has extended the top-up deadline several times due to high demand – you currently have until April 2025.
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However, it can be complicated to work out if you’ll benefit from topping up and it often involves phoning both HMRC and DWP.
HMRC said the new service will be launched as soon as possible after the usual update to the NI system at the start of the new tax year.
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