State Pension

A regular income once you reach State Pension age

The State Pension gives you a regular income once you reach State Pension age. It is based on National Insurance contributions and the amount you get depends on how much you paid in. To receive it you must have paid or been credited with National Insurance contributions.
 
There are different rates of State Pension. The rate you receive depends on your circumstances. The full Basic State Pension is currently £113.10 per week – under existing rules, the amount of State Pension you get depends on your National Insurance contributions, and sometimes those of your current or former spouse or registered civil partner.

Basic State Pension – what is the rate?
The following list is an overview of the maximum basic State Pension you can get.

Circumstances and Basic State Pension weekly rate for 2014/2015

Single man or woman:
£113.10
 
Married man, woman or registered civil partner (who qualifies with their own National Insurance Contributions):
£113.10

Married man, woman or registered civil partner (using his wife’s, her husband’s or registered civil partner’s National Insurance record):
£67.80

You may have made contributions from your earnings or have been credited with them by the Government, if you were caring for a child or disabled person.

The basic State Pension increases every year by whichever is the highest:

•    Earnings – the average percentage growth in wages (in Great Britain)
•    Prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
•    2.5%

You may have to pay tax on your basic State Pension.

You can top up your State Pension to £67.80 per week if:

•    You expect your basic State Pension will be less than that
•    You’re married or in a registered civil partnership
•    You meet the qualifying rules

Additional State Pension
You might also qualify for the Additional State Pension. The Additional State Pension is sometimes also known as ‘SERPS’ or the ‘State Second Pension’ (S2P). Not everyone receives an additional State Pension. The amount you get depends on your earnings.

Additional parts of the State Pension rise in line with the increase in prices. These include:

•    The State Second Pension (S2P)
•    The State Earnings-Related Pension Scheme (SERPS)
•    Graduated Retirement Benefit
•    Extra State Pension received for putting off (deferring) your State Pension claim (also called ‘increments’)

Until you reach State Pension age, the amount of State Second Pension or SERPS you have built up will usually be increased in line with the growth in average earnings. This is also known as ‘revaluation’.

Receiving the basic State Pension
The earliest you can receive the basic State Pension is when you reach State Pension age. Your basic State Pension depends on the number of years you’ve paid National Insurance or got National Insurance credits, for example, while unemployed or claiming certain benefits.

To qualify for a basic State Pension, at least one of the following must apply:

•    You were working and paying National Insurance
•    You were getting certain benefits, for example, unemployment or sickness
•    You were a parent or carer and claiming certain benefits or credits
•    You have a spouse or registered civil partner whose National Insurance contributions cover you
•    You were paying voluntary National Insurance contributions

You need 30 years’ worth of contributions or credits to get the full basic State Pension. These are your ‘qualifying years’.
If you have fewer than 30 years, your State Pension will be less than £113.10 per week, but you might be able to top up by paying voluntary National Insurance contributions.

Over 80 Pensions
The Over 80 Pension is a State Pension that is available if you are aged over 80 and have little or no State Pension.
The rate is currently £67.80 weekly in the tax year 2014/2015 if you don’t get a basic State Pension. If you’re on a reduced State Pension, the Over 80 Pension will top up your State Pension to £67.80 a week.

Pension Credit
If you are a pensioner in the current tax year 2014/2015, Pension Credit could top up your weekly income to a guaranteed minimum of:

•    £148.35 if you are single
•    £226.50 if you have a spouse or partner

If you are aged over 65, you may also be able to get Savings Credit up to an additional:

•    £16.80 weekly if you are single
•    £20.70 weekly if you have a spouse or partner

The age when you can claim Pension Credit is rising in line with the increase in State Pension age for women and the further increase to 66 for men and women.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This information does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust
There are a number of rules that can influence your retirement planning. To discover how we could help you save for your retirement and achieve financial independence, please contact us for further information.


Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 
Visit our Website at:
www.pps-vet.co.uk

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.GM19

Planning for the quality of life you want in your golden years

Looking forward to a secure and financially independent retirement

Saving for your retirement may not seem important when you’re starting out. But the sooner you start saving for your retirement, the more secure your future will be.

It’s so important to invest for your retirement. Putting as much as you can into a pension provision as soon as you can gives you a much better chance of having the retirement you want.

When planning your retirement, there are three main types of pension you need to consider. These are State Pensions, private personal pensions and occupational workplace pensions.

Whether you are thinking of starting a pension, reviewing your existing pension provision or are about to take benefits from a scheme, there are many issues you should discuss with us:

•    At your age, how much should you be saving?
•    Could you optimise your tax position for retirement by also saving in an alternative tax-efficient vehicle?
•    Would bringing existing pension funds you have built up together in one place help you manage them better?
•    How can you maximise your pension contributions as you reach retirement age?
•    What might you expect by way of pension from the State and when will you receive it?
•    What’s the best time to start taking income from your pension fund?
•    What are the alternatives to buying a pension annuity and why might they be better for you?
•    How can you use your tax-free cash allowance to the best advantage?
•    What if you want to take your pension fund overseas?

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This information does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust
The quality of life you want in your future retirement years will depend on what you contribute in the present. Planning your finances can help to ensure that you have peace of mind, so that you can look forward to a secure and financially independent retirement. To discuss how we could help you achieve this goal, please contact us.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.18

PPS 2013 Autumn Statement Snapshot

  
The Chancellor delivered a relatively upbeat assessment of the UK economy in an Autumn Statement that, among other things, also introduced a rise in the state pensionable age and some new tax avoidance measures.

                         

Brighter prospects ahead?

Chancellor of the Exchequer George Osborne delivered a relatively optimistic assessment of the UK economy in his 2013 Autumn Statement. He hailed the ongoing recovery – the UK economy is growing more rapidly than that of any other major advanced nation, including the US and Germany – but warned that the country remains particularly vulnerable to future shocks from the eurozone.

Economic growth is picking up

The UK economy appears to be recovering more rapidly than expected. The Office for Budget Responsibility (OBR) more than doubled its forecast for economic growth this year from 0.6% to 1.4%, and also raised 2014’s prediction from 1.8% to 2.4%.

However, the forecasts for the following three years were trimmed to 2.2%, 2.6%, and 2.7% respectively. Looking back, the UK economy contracted more sharply than previously calculated during the recession – although the UK managed to avoid falling into a “double-dip” recession, the economy actually contracted by 7.2% from peak to trough in 2008/09, compared with earlier estimates of 6.3%.

Budget surplus sooner than expected

Government borrowing has fallen “significantly more than forecast” and the UK budget is predicted to be in surplus by 2018/19. The underlying deficit has fallen from 11% of GDP in 2010 to 6.8%, instead of the 7.5% forecast in March. The deficit is predicted to decline to 5.6% next year and to continue to fall over the following three years – by 2018/19, the OBR expects the UK to be running a budget surplus.

Cash borrowing is lower than expected. The UK will borrow £111bn during 2013 – £9bn less than previously estimated. Borrowing is then predicted to fall to £96bn next year, £79bn in 2015/16, £51bn in 2016/17, and £23bn in 2017/18. Overall, the government expects to borrow £73bn less over the period than expected.

Longer life – but a longer working life

A rise in the state pensionable age will be imposed earlier than expected, beginning in the mid-2030s rather than in 2046. The government plans to increase the state pensionable age to 68 in the mid-2030s and to 69 towards the end of the following decade. The increase in pensionable age is intended to keep track with increased life expectancy.

The government also intends to introduce a cap on total welfare spending, but this will not include the basic UK state pension or the “most cyclical of benefits for jobseekers”. The state pension will increase by £2.95 per week from April 2014 and individuals of pensionable age will be allowed to make additional voluntary National Insurance contributions to help boost their state pension.

Tax breaks and tax avoidance

The personal income tax allowance will increase to £10,000 from April 2014 and, from April 2015, the government will introduce a new transferable tax allowance for married couples and civil partners who pay the basic rate of tax. New rules on tax avoidance will also be introduced, and are projected to raise a total of £9bn over five years. Non-UK residents who sell residential property in the UK will become liable to pay capital gains tax from April 2015.

The Chancellor abolished stamp duty on shares bought in exchange traded funds (ETFs), in order to help persuade ETFs to situate themselves in the UK. The levy on banks will be increased to 0.156% from 1 January 2015 in a move expected to raise £2.7bn in 2014/15 and £2.9bn each year from 2015/16.

A helping hand for small businesses?

Business rate relief for small businesses was extended for another year. Increases on business rates in England and Wales will be limited to 2%, and firms will be allowed to pay their business rates in 12 monthly instalments. The Chancellor also announced a £1,000 discount on business rates for smaller shops, pubs, and restaurants for the next two years

Unemployment set to fall

The rate of unemployment is forecast to fall from 7.6% this year to 7% in 2015, and is expected to reach 5.6% by 2018. This is particularly significant because the Bank of England has stated an unemployment rate of 7% is the threshold at which policymakers will consider tightening monetary policy. Elsewhere, in a bid to improve prospects for youth employment, the Chancellor announced a plan to remove employers’ national insurance contributions from April 2015 on 1.5 million jobs for young people

More to do

Reacting to the Statement, the Confederation of British Industry commented: “As we enter the festive season, positive news on growth is clearly welcome but much remains to be done if the benefits of economic recovery are to reach every home in every corner of the UK.” For its part, the Ernst & Young ITEM Club pointed out the improvement is, at this stage, cyclical rather than underlying, and concluded this is “not an opportunity for a fiscal relaxation”.

And finally…
As is always the case with complex legislation such as this, it pays to seek advice from a professional financial planner.

The contents of this article are for guidance only and do not constitute financial advice. If you have any questions about the issues featured please contact us.

Call our friendly, knowledgeable team for a confidential, no obligation discussion: 01527 880345

Visit our Website at: www.pps-vet.co.uk

The PPS Group relates to Professional Practice Services, our Business Consultancy and Independent Financial Advisory arm, and PPS GI, our specialist insurance brokerage.

PPS Group is a trading name of Professional Practice Services which is authorised and regulated by the Financial Conduct Authority. PPS GI is an appointed representative of Professional Practice Services, which is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.