From April 2019, state pension rates are set for huge changes. According to Which?, the government have confirmed what the basic and single-tier state pension rates will change to from 6 April next year. The changes also include a number of other benefits. Those retiring after April next year, as well as those already claiming state pension, will see a slight increase in the amount they receive.
Basic state pension rates
People receiving the basic state pension will see a weekly increase in 2019/2020.
They will get an extra £3.25 per week, increasing the state pension from £125.95 to £129.20.
Retired workers receiving the basic state pension will have an extra £169 per year as a result, making it the equivalent of £6,718.40 in annual income.
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New state pension rates
Those receiving the full new single-tier state pension will also see a rise in their payments.
Instead of £164.35, those in this particular group will receive £168.60 – giving them an extra £4.25 per week.
Over the whole year, it works out as an extra £221 and makes the total annual income £8,767.20.
Additional state pension rates
Which? explained: “If you reached state pension age before April 2016, your state pension will be made up of two parts; the basic state pension and the additional state pension – sometimes referred to as the second state pension.”
The additional state pension increases by the rate of CPI inflation, which was announced in September.
Therefore, in April 2019 the additional state pension will increase only by 2.4 per cent.
There will still be a cap on the additional state pension you can earn, although this will wise from £172.28 to £176.41 per week.
Pension credit
This benefit is awarded based on earnings.
From April next year both pension credit payments will rise by 2.4 per cent. Guaranteed credit will increase to £167.25 from £163 per week for a single person and £255.25 from £248.80 for a couple.
The second part of pension credit, savings credit, will have its limit raised to £13.72 from £13.40 for a single person, and £15.35 from £14.99 for a couple.
Personal lifetime allowance
Pension lifetime allowance is the maximum that can be put into retirement savings without being taxed.
This also increases based on the rate of CPI, so from next year this change will see a rise from £1,030,000 to £1,055,000.
Which? claim this means an extra £24,800 in tax-free pensions savings.