CHANGES to pensions are coming into force this year, which will affect those in retirement as well as savers still working.
The New Year celebrations are over and now 2022 is bringing some big financial changes that may affect your pension pot.
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But the good news is that millions of Brits stand to be better off from the new rules overall – we reveal just how.
State pension increase
Millions of Brits claiming the state pension are set to be better off by around £5.50 a week.
Anyone claiming the new state pension and getting the full amount will get around £185.15 a week, up from the current £179.60 a week.
Over a year that’s £9,628, up from £9,339 – or an extra £290 overall.
The state pension rises each year, and this year it will go up by 3.1%.
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The government suspended the triple lock, which would have likely seen the payment increase by much more.
But the exact rate, and triple lock changes, are still subject to government approval.
Pension credit rise
Also on the rise is pension credit, a benefit for those in retirement which can boost income and give access to extra perks like a free TV licence.
Pension credit can boost your income by up to £177.10 a week if you’re single and by £270.30 for couples.
This can be higher in some cases, such as if you’re caring for someone else.
The payment is also expected to increase at the same rate as inflation, to £182.59 and £278.68 respectively.
However, the exact amounts are still to be confirmed by the government.
One million pensioners are still missing out on Pension Credit, The Sun recently revealed.
Even if your income is higher than these minimum weekly amounts, you might still be eligible for Pension Credit if you have a disability, care for someone, have savings or if you have housing costs.
Many people think it’s not worth claiming because they may only get pennies – but it’s worth getting for the other perks that can save you much more.
The exact amount you can get depends on your circumstances so using a benefits calculator can help you work out how much you could get.
Flat fees banned on small savings
Hundreds of thousands of Brits will avoid losing pension cash under new rules which also come into effect in April.
Pension pots with only small amounts saved can be eaten up by fees, reducing their value to nothing in the worst case.
But these will be banned on on pots valued at £100 or less for workplace pensions that staff are auto-enrolled in.
It’s estimated that Brits will have around seven different jobs in their working life, on average.
And more than 10 million Brits are now enrolled in a pension automatically through work.
That means many of us now have several small pensions from different jobs.
The change means they will no longer be eaten up by fees – but that doesn’t mean you need to forget about it ass you can still lose cash charges over this amount.
Here’s how you can avoid big fees on small pension pots.
Part-time worker pension boost
Thousands of workers could get a major cash boost to their pension at the same time the national living wage rises.
From April, the minimum wage for those over 23 will increase to £9.50.
This boost will bump some people’s pay over the amount needed to be enrolled in a pension through their work automataically.
Experts say this could be affect thousands of workers, and particularly those who are employed part-time.
Workers need to earn £10,000 a year to be auto-enrolled, though anyone earning slightly less can ask to join.
It could boost their pension savings by up to £4,800 through contributions made by employers alone, which is essentially free cash. And that’s on top of the money they save themselves.
Workers on low income could also get a boost to pensions after a tax-relief loophole closes – but not until 2024.
Changes for expats
As early as this month, changes will come in that affect retired Brits who are thinking of moving abroad.
From January, British citizens who move to live in an EU or EEA country or Switzerland can no longer be able to count time lived abroad in Australia, Canada or New Zealand toward their state pension.
It doesn’t affect you if you’ve lived there up until New Year’s eve 2021, but the change will came into force from the start of 2022.
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