State Pension – Likely to rise by 8.5%
If you follow the media closely you will have seen that it is currently predicted that the state pension will rise by a further 8.5% in April 2024. A government review of the state pension is conducted every September for an increase in the following April. April 2023, due to the massive inflation figures we all experienced the increase was 10.1%.
In order to receive a full state pension you need to make sure you have completed the full requirement of national insurance contributions of broadly 35 years, you can check out your national insurance record and potential state pension amount by visiting the government website https://www.gov.uk/check-state-pension, you’ll need your own government gateway login details or register for these.
Since the previous review, anyone that had retired after April 2016 received a flat rate state pension of £203.85 per week (£10,600.20 per annum).
A further increase of 8.5% in April 2024 would mean the flat rate state pension could be £221.20 a week (£11,502.40 per annum)
It is worth noting that the state pension is paid every four weeks, meaning the current flat rate pension will be broadly £815 each four-week period and April 2024 would be broadly £884.
The state pension rises each year by something called the triple lock, this rise by whichever of the three measures is the highest:
- Inflation (consumer prices index)
- Average increase in wages in the UK
You can find out when you are going to receive your state pension by inputting your date of birth into the government online calculator https://www.gov.uk/state-pension-age
It is worth noting the state pension is taxable although under the order of income you receive e.g. private pensions, salary etc the state pension is first in the pecking order meaning most of your personal allowance (£12,570 an amount you can earn before tax on your income) is utilised from this source of income first then all other sources of income are then taxed upon.
The personal allowance is fixed until 2026, meaning the more pay rises etc you receive you will pay more in tax (obviously you can pay more into your pension or other tax vehicles to reduce this, please speak to us to get a better understanding of your own circumstances first), however if in the tax year 2024/2025 and 2025/2026 the state pension were to rise by 6% each year this will then provide a state pension of £12,923 per annum meaning this is over the personal allowance of £12,570 and may have tax applied, something I am sure the government will need to look at more closely at nearer the time.
Will you be reliant on just the state pension when you retire, or have you been building up your own retirement pot that you have running alongside your state pension?
Can you live and pay all your bills on £11,500 per annum?
If you want to look at what other options are open to you lets arrange a call to discuss your options and put a retirement/pension plan in place for you, you can call us on 01483 654135 or email direct on firstname.lastname@example.org