Some major changes to benefits, pensions and furlough are coming into force this month.
Those claiming all-in-one benefit Universal Credit could see extra cash coming their way this month, with anyone who lost out when they were moved over from other benefits, such as Jobseeker’s Allowance (JSA), in line for a boost of up to £405 a month.
Furlough has been scaled back for the second time since the scheme was launched, as of October 1, meaning employers now have to front 20 per cent of wages, national insurance contributions and pension contributions.
Money Saving Expert Martin Lewis has warned employees on furlough should check their pay slips to check that their salary hasn’t fallen as some firms might forget to update their records to account for the drop off in Government funds.
And as of today, October 6, people have to wait until they are at least 66 before claiming their state pension.
Here are the major changes happening in October – and what it means for you – in more detail;
From October 1, the Government will scale back its contributions for the second time since the scheme was launched.
The Government’s grant will fall to 60% of wages, up to the value of £1,875.
Employers will have to pay national insurance contributions, pension contributions and 20% of wages to take the total to 80% (or £2,500).
But it’s wise to check your pay slip to make sure you salary hasn’t fallen – with Martin Lewis warning in the past that some firms might forget to update their records to account for the drop off in Government funds.
People who lost out when they were moved from other benefits to Universal Credit are in line for a boost of up to £405 a month from October.
Eligible claimants will see their payments get a sudden rise of £120, £285 or £405.
The rise is designed to bridge the gap between the old benefits and Universal Credit.
The payment drop affected those who switched to Universal Credit from Income Support, Jobseeker’s Allowance (JSA), Employment and Support Allowance (ESA), Housing Benefit or Pension Credit, if they were also receiving a top-up allowance called Severe Disability Premium (SDP).
When moved from those ‘legacy benefits’ on to Universal Credit they discovered the amount they received was far lower. This change is designed to cover that loss.
From Tuesday, 6 October, you will need to be at least 66 before you can start claiming your state state pension.
It’s the latest move to push back when you are able to get your hands on the money, following a string of rises over the past 10 years.
In some cases, it means women are waiting as much as 6 years longer to claim than they originally thought.
Men and women born between October 6 1954 and April 5 1960 will start receiving their pension on their 66th birthday.
The date when someone starts to receive their state pension depends on when they were born and increases to the state pension age have been taking place for many years under the Pensions Act 2011.
“The increase to the state pension age provides a timely reminder to everyone to check your pension pots and ask yourself whether the savings you’ve built up are enough for the kind of life you want in retirement.
“Our latest retirement report found that nearly half (45%) of over-50s fear running out of money in retirement. The reality is that, for many, the state pension on its own will not be sufficient to see them through their golden years.
“This is why it’s important to pay into a private pension throughout your working life – particularly if you want to retire before the state pension age.”
He said that in the tough financial climate due to COVID-19, it may be tempting for some people to see private pensions as an expense they can do without.
“But taking a short-term view is risky and may result in sacrificing long-term financial security,” he added.
Under the system of gradually rolling the state pension age upwards, some people have already needed to wait until the age of 66, or close to it, to receive their state pension.
People born on September 6 1954 reached state pension age on September 6 2020.
The state pension age will not stop at 66 – meaning younger generations will face needing to wait until they are closer to 70 before they can draw a state retirement income.
Tom Selby, a senior analyst at AJ Bell, said: “State pension provision is only moving in one direction in response to rapidly rising life expectancy in recent decades.
“Since 2010 we have seen the state pension age equalised for men and women at 65, before increasing to 66 for all between 2018 and 2020.
“That is unlikely to be the end of the story, however. Plans are already in place to increase the state pension age to 67 by the end of this decade and then 68 by the end of the next decade.
“Furthermore, if average life expectancy continues to increase, the state pension age will inevitably follow suit.
“This means younger savers probably need to plan assuming they might not reach their state pension age until 70 or even beyond.
“Anyone who aspires to more than the bare minimum in retirement needs to take responsibility as early as possible to build their own retirement pot.”
-- to www.plymouthherald.co.uk