Among the various changes to benefits coming into effect in 2020, the state pension is going up.
MPs have approved a raft of increases to social security payments such as Universal Credit, most of them starting in April 2020.
State pensions are set to go up by 3.9 per cent, the biggest rise since 2012.
The pension is protected by what’s called the triple lock – meaning the amount paid is increased every year in line with inflation, average earnings or 2.5 per cent, whichever is highest.
In this case, average earnings went up by 3.9 per cent in the thee months leading to July 2019 so that figure was used to determine the increase.
So what does this mean for your pension?
Here’s how the increases affect each aspect of the state pension.
State pension changes for April 2020
New State Pension
Full rate – increasing from £168.60 to £175.20
Transitional rate below full rate – increasing from 2.5859% to 3.9146%
Protected Payment – decreasing from 2.40% to 1.70%
Increments – own (based on deferred new State Pension) – decreasing from 2.40% to 1.70%
Increments – inherited (based on deferred old State Pension) – decreasing from 2.40% to 1.70%
Old State Pension
Category A or B basic pension – increasing from £129.20 to £134.25
Category B (lower) basic pension – spouse or civil partner’ s insurance – increasing from £77.45 to £80.45
Category C or D – non-contributory – increasing from £77.45 to £80.45
Additional pension
Decreasing from 2.40% to 1.70%
Maximum additional pension (own + inherited) – going up from £176.41 to £179.41
Increments
Basic pension – decreasing from 2.40% to 1.70%
Additional pension – decreasing from 2.40% to 1.70%
Graduated Retirement Benefit (GRB) – decreasing from 2.40% to 1.70%
Inheritable lump sum – decreasing from 2.40% to 1.70%
Other
Contracted-out Deduction from AP in respect of pre-April 1988 contracted-out earnings – nil
Contracted-out Deduction from AP in respect of contracted-out earnings from April 1988 to 1997 – decreasing from 2.40% to 1.70%
Graduated Retirement Benefit (unit) – increasing from 0.1416 to 0.1440
Increase of long term incapacity for age – decreasing from 2.40% to 1.70%
Addition at age 80 – stays at 0.25
Increase of long-term incapacity for age:
- higher rate – increasing from £22.90 to £23.30
- lower rate – increasing from £11.50 to £11.70
Invalidity Allowance (Transitional) for State Pension recipients:
- higher rate – increasing from £22.90 to £23.30
- middle rate – increasing from £14.70 to £14.90
- lower rate – increasing from £7.35 to £7.45
Other changes coming
The bad news is that the adult dependency payment (ADI) is being stopped in April, which could mean thousands of pensions cut by £70 a week.
ADI is a payment for a partner who is financially dependent on you and hasn’t yet reached pension age.
The scheme closed to new applications in 2010 and will cease entirely this April.
The Government says that when the payments stop, pensioners may be eligible to get Pension Credit or Universal Credit instead to top up the amount they receive.
In addition, the qualifying age for men and women will rise to 66 in October 2020.
It means anyone born after October 5, 1954, will have a state pension age of at least 66.
And there will be further rises too. The Conservatives have set out plans to increase the state pension age to 67 by 2028 and 68 by 2039.
How to boost your pension
You need 30 years of National Insurance contributions to be eligible for the full basic state pension if you are male and born before April 6, 1951, or female and born before April 6, 1953.
If you have gaps in your insurance record, your state pension will be lower than the standard amount.
But you could make voluntary contributions to increase it.
Deferring your state pension could increase your payments when you do decide to claim. The basic state pension increases by 1 per cent for every five weeks you delay claiming it.
If you’re married or in a civil partnership you may be eligible to increase your basic state pension.
You are eligible for this top-up if f both of you have reached state pension age and either:
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your spouse or civil partner reached state pension age before April 6, 2016 and qualifies for some basic state pension, even if they have not claimed it
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your spouse or civil partner reached state pension age on or after April 6, 2016 and has at least one qualifying year of National Insurance contributions or credits from before April 6, 2016, even if they do not qualify for any new state pension or they have not claimed it
If your spouse or civil partner was born before April 6, 1950, you can only get the top-up if you’re a woman who is married to either:
If you qualify for the top-up you should get it automatically.
You might also qualify for Additional State Pension or, if you’re on a low income, Pension Credit.
-- to www.birminghammail.co.uk
