- Home » Expat News » UK government sneaks in controversial state pension changes
UK government sneaks in controversial state pension changes
| Published: | 23 Jul at 6 PM |
Want to get involved?
Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Become a Local Expert and contribute articles.
Get in touch today!
Controversial changes to the UK state pension due to affect millions have been slipped in just before Parliament’s summer break.
The changes apply to pensioners who decide to delay claiming their UK state pensions and will come into force for those hitting pension age on or after 6 April 2016. At present, a bonus of 10.4 per cent per unclaimed year is paid to those choosing to defer their entitlement.
Many UK citizens, especially those still in employment after the age of 65, have chosen to defer, with some waiting up to 10 years before claiming. To date, some 1.2 million retirees are receiving extra state pension payments due to their decision, but those whose entitlement begins in April 2016 will have the bonus slashed from 10.4 per cent to 5.8 per cent.
The move is expected to hit expats working abroad in their own businesses, as many may not be planning to retire until it’s absolutely necessary for health reasons. In addition to the cut to 5.8 per cent, the present popular option to take the bonus as a lump sum is to be axed, with the reduced annual bonus simply added to the monthly pension payment.
Pension Minister Steve Webb was heavily criticised for announcing the changes on the last parliamentary sitting before its long summer break. It’s a tactic frequently used by British politicians breaking bad news in the hopes that all will be forgotten before Parliament reconvenes in the autumn.
The new rules are being put forward as simply a technical change, but for those wishing to defer taking the state pension for as many as ten years it means a real drop in the amount received. Fortunately, those who have already deferred will still be paid the 10.4 per cent annual bonus as part of their monthly total, with those due to retire before 6 April 2016 also unaffected.
The changes apply to pensioners who decide to delay claiming their UK state pensions and will come into force for those hitting pension age on or after 6 April 2016. At present, a bonus of 10.4 per cent per unclaimed year is paid to those choosing to defer their entitlement.
Many UK citizens, especially those still in employment after the age of 65, have chosen to defer, with some waiting up to 10 years before claiming. To date, some 1.2 million retirees are receiving extra state pension payments due to their decision, but those whose entitlement begins in April 2016 will have the bonus slashed from 10.4 per cent to 5.8 per cent.
The move is expected to hit expats working abroad in their own businesses, as many may not be planning to retire until it’s absolutely necessary for health reasons. In addition to the cut to 5.8 per cent, the present popular option to take the bonus as a lump sum is to be axed, with the reduced annual bonus simply added to the monthly pension payment.
Pension Minister Steve Webb was heavily criticised for announcing the changes on the last parliamentary sitting before its long summer break. It’s a tactic frequently used by British politicians breaking bad news in the hopes that all will be forgotten before Parliament reconvenes in the autumn.
The new rules are being put forward as simply a technical change, but for those wishing to defer taking the state pension for as many as ten years it means a real drop in the amount received. Fortunately, those who have already deferred will still be paid the 10.4 per cent annual bonus as part of their monthly total, with those due to retire before 6 April 2016 also unaffected.
Comments » No published comments just yet for this article...
Feel free to have your say on this item. Go on... be the first!
