The Chancellor’s Autumn Budget Statement

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25.01.16

The Chancellor of the Exchequer delivered his Autumn Statement at the end of November 2015.  The key pensions announcements are:

State Pensions: The basic State pension will be increased by £3.35 to £119.30 a week from April 2016. This is the biggest increase in real terms to the basic State Pension since 2001.

The new single-tier state pension for those who reach state pension age on or after 6 April 2016 has been set at £155.65 a week.  35 ‘qualifying years’ of National Insurance contributions or credits are needed to qualify for the full amount.  Due to transitional arrangements many retirees may get more or less than this flat rate.  If you have been contracted out of the State Second Pension, you paid lower NI contributions and your new single-tier state pension will be reduced to compensate for this.

Pensions tax relief: The Government confirmed it will publish its response to a major pensions tax relief consultation in the 2016 Budget.

Auto-enrolment: To simplify the administration of auto-enrolment, the planned increases to minimum contribution rates to Defined Contribution schemes will be aligned to tax years. Instead of increases taking place in October, they will now occur in April of the following year. 

Date

Employer minimum contribution

Total minimum contribution*

To 5 April 2018

1%

2%

6 April 2018 to 5 April 2019

2%

5%

6 April 2019 onwards

3%

8%

*The total minimum contribution may include employer and member contributions and tax relief, if applicable.

Pension Credit: From April 2016, payments of means-tested Pension Credit will be limited to four weeks where recipients are outside Great Britain (for example on an extended holiday).

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