Could recent pension changes affect your retirement plans?
Regardless of how much money you earn or your position in society, it’s always important to keep abreast of new government laws and regulations that may impact on your personal finances.
With a raft of pension and benefits-related measures unveiled in the past year, I think now is a particularly good time to look at your current situation and consider what, if any, changes need to be made.
Doing so, I feel, will give you the best possible chance of getting your finances in shape so that you are in a position to make your life aspirations a reality. With that in mind, I’ve put together some information about a few of the plans that may have a significant impact on your retirement goals.
One of the moves that I think will particularly appeal to all Britons is the news that the state pension is due to increase in April 2017. A white paper published in January unveiled plans for the weekly payout for a single person to rise from the current figure of £107.45 up to £144 in today’s money (though it’s thought this figure will actually be closer to £162 when the move is enforced).
This comes as part of the government’s plans to implement a single-tier state pension, with this universal weekly payment due to replace numerous coexisting elements of the present retirement system, including the basic state pension and pension credits.
Bereavement benefit overhaul
Among the other plans unveiled by the government that may impact on your financial goals were proposals to overhaul the current benefits system for people who have lost their partner. Under the planned Bereavement Support Payment, a more uniformed support structure for the bereaved will be in place to help make the financial burden that can come after losing a spouse easier to manage.
I should point out now that details of the scheme are yet to be approved, but it’s thought that a bereaved claimant who does not have any dependent children will get a lump sum of about £2,500, followed by monthly payments of £150 for the following year.
Widows who do have children to look after, meanwhile, may receive around £5,000 as a one-off payment, followed by monthly imbursements of £400.
Introduction of the auto-enrolment workplace pension programme
Lastly, I think it’s worth noting that the government’s auto-enrolment came into effect last October. This programme will eventually see all British businesses required to enrol their staff on to a workplace pension scheme in a bid to give workers a more secure financial future and to make them think more about planning for retirement.
The initiative is being rolled out in stages, with only the country’s largest employers currently obliged to provide workplace pensions, though it’s estimated that it will be fully rolled out by early 2018.
To qualify for a company’s auto-enrolment workplace pension, however, you’ll need to meet certain criteria. These include, among others, being aged 22 or above and earning more than £8,105 a year (though this figure will be reviewed each year). Also, you must not already be a member of an existing pension scheme in order to qualify.
With so many changes unveiled in recent months, I think it’s important to reconsider your financial position and look at whether the moves will impact on your aspirations as you get older. If you feel there’s something you would like to do before retiring fully, for example, you might want to consider early pension release. Doing so allows you to unlock a proportion of your retirement earnings which could be used to pay for the holiday of a lifetime, fund home improvements or manage debts before you choose to give up work altogether.
Do you think your retirement plans will change as a result of the above measures? If so, please share your thoughts by leaving a comment below.