There are some changes to expect when it comes to your retirement savings this year, from a state pension increase to a rise in pension credit.
But with rumours of a general election approaching and a Spring Budget in the not-too-distant future, more changes could happen.
For now, let’s take a look at the pension changes that have been confirmed for 2024 and when you can expect them, according to Which?.
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State pension
The state pension will be going up by 8.5% and those who are entitled to it will see a boost of £902 in their payments from April 8, 2024.
Which? explained: “Those entitled to the full level of the new state pension will get £221.20 a week, up from £203.85 this year. This change means that pensioners will be £902 better off by the end of the 2024-25 tax year, taking their total income to £11,502.40.
“State pensioners who qualified before April 2016 and receive the basic state pension will see their weekly payments rise from £156.20 to £169.50. This amounts to a £692 increase in 2024-25, giving a total annual income of £8,814.
“How much state pension you get depends on your National Insurance record, so you could get less than the headline rates (or more if you’ve built up substantial additional state pension).”
Pension Credit
“In 2023-24, if you are over state pension age (66) and your income is less than £201.05 a week, pension credit will top you up to that amount. For a couple, the combined income figure is £306.85,” explained Which?.
“For 2024-25, pension credit will top you up by an extra £17.10 per week (from £201.05 to £218.15). For couples, the increase is £26.10 per week (from £306.85 to £332.95).
“This top-up is known as ‘guarantee credit’. There is another part of pension credit known as ‘savings credit.’ You may be eligible for one or both.
“Savings credit is payable to pensioners who reached state pension age before 6 April 2016.
“If you’re eligible you’ll get up to £15.94 a week (£17.84 if you have a partner). This amount is rising by 6.7% (CPI inflation in September 2023), so from April, you’ll get up to £17.01 a week (£19.04 if you have a partner).”
More than 99% of pensioners have already received up to £600 to help with energy bills and household budgets this winter – support worth over £4.8bn
This is part of DWP’s commitment to protecting pensioners
Find out more https://t.co/ME4jEDTcmj#HelpForHouseholds pic.twitter.com/KzPn6tnI2B
— Department for Work and Pensions (@DWPgovuk) December 20, 2023
Similar to state pension, the amount of pension credit you are eligible for will also rise from April this year.
Lifetime allowance
Elsewhere, the lifetime allowance (LTA) is being scrapped altogether from April.
Which? commented: “Previously, you could save as much as you wanted into a pension, but if it exceeded a total amount (LTA), you could be hit with a hefty tax charge. In 2022-23, the lifetime allowance was £1.073m.
“While this was a high threshold, the LTA had been particularly impacting doctors and consultants working in the NHS who were quitting the workforce when their pensions neared or reached the threshold to avoid being hit with a big tax bill.
“Although the lifetime allowance is being abolished, there will still be a cap (of £268,275) on the tax-free lump sum you can take from your pension.
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“In some cases, this might be higher if you had previously protected your lifetime allowance at a higher rate. Check with your provider if you’re unsure.”
‘Pot for life’ proposals will start to ‘take shape’
When starting a new job, your employer will enroll you into a pension scheme, but as we change jobs and careers, we often end up with multiple pensions.
“As part of his Autumn Statement in November, the Chancellor unveiled plans to address this problem by introducing a ‘pot for life’, into which workers could ask their employer to pay contributions,” adds Which?.
“However, it could take years for this to become a reality. In the meantime, you can make it easier to keep tabs on your pensions by choosing to combine them into one scheme.”
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