The Autumn Statement 2013 - state pension ages will rise in the future

The Government’s autumn statement took place today. Here are details of the changes affecting pensions:

1.       State pensions: State pension ages (SPA) will increase again, as widely trailed overnight. The increase to a SPA of 68 will take place in the mid-2030s with a further increase to 69 in the late-2040s. Someone born today is likely to have an SPA of at least 72. The increases to 68 and 69, plus previously announced changes to 66 and 67, will save the Government around £500m over the next 50 years.

2.       Income drawdown: The Government has been conducting a review of income drawdown tables to see if the allowable income is reasonable – as some providers have been asking for drawdown income tables not to be linked to annuity rates and/or allow a higher income. The Government Actuary’s Department (GAD) has found withdrawal rates are a reasonable match to annuity rates, so the government will not change the basis on which the GAD tables are formulated.

3.      Class 3A voluntary National Insurance – In October 2015 the government will introduce a new class of voluntary NICs to allow pensioners who reach State Pension Age before 6 April 2016 an opportunity to top up their Additional Pension records. This is to try and help those people who won’t qualify for the new single tier state pension which is due to be introduced in 2016.

4.       Individual Protection – As a result of reducing the pension lifetime allowance to £1.25m from 6 April 2014, the Government has confirmed it will introduce individual protection 2014 (IP14) through the 2014 Finance Bill. Individuals who claim IP14 will have a lifetime allowance of the value of their pension savings on 5 April 2014 subject to an overall maximum of £1.5 million.