Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “Pensioners across the country will be relieved to see no state pension shocks in the Budget as the Chancellor confirms that the state pension will rise by 4.1% to match the average earnings element of the triple lock. This means that next year’s full new state pension is set to reach £11,975.60 annually, an increase of £473.
“This will come as welcome news to many, however there are possible tax implications for pensioners. The Personal Allowance, which is the amount of income you can receive before paying tax, has been frozen since at £12,570 since 2021/2022 and currently remains fixed in for quite a few years to come. This means that the full new state pension payment has grown from 70% of the allowance in 2019/20 to a likely 95% next year, leaving pensioners with only £594.40 of headroom before they begin paying income tax.
“While the state pension is on the up, it’s worth remembering that it still falls short of the £14,400 a single pensioner needs for a minimum standard of living in retirement, according to the Pensions and Lifetime Savings Association (PLSA). For our younger generations, one way to future proof their retirement saving is to a look at workplace or private pension provision and make sure to check it matches with their retirement expectations – there are a number of online tools and calculators that can help with this.”
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