Chancellor of the Exchequer Alistair Darling today announced in his 2009 Budget that state pension would rise by a guaranteed minimum of 2.5% in 2010.
He also made Pension Credit more widely available, to those with savings of up to £10,000 from November 2009 rather than the current limit is £6,000. Tax relief on pension contributions will be cut for top-rate taxpayers in 2011, from the current 40% to 20%.
State pension to rise
State pensions are normally increased each year in line with inflation as measured by the retail price index (RPI). Although this has recently ‘gone negative’ and was forecast to reach -3% by September, when the next pension rise is set, the Chancellor guaranteed that they would rise by at least 2.5% in 2010.
Pension credit more wide available
Pension credit, which is used to top up the income of the poorest pensioners, is not currently available to anyone with savings of over £6,000. This ‘capital disregard’ has remained static for over a decade and will go up to £10,000 in November 2009.
Winter fuel allowance to stay at current rate
Winter fuel allowance was significantly increased last year, It will stay at the current rate of £250 for pensioners aged over 60 and £400 for those aged over 80.
National insurance boost for grandparent carers
Working-age grandparents who act as carers for their grandchildren will receive National Insurance credits that help to build up their entitlement to basic state pension
Pension tax relief cut for top earners
Top-rate taxpayers can currently claim 40% tax relief on contributions made to their pension. From April 2011 this will be cut to 20% for those with a taxable income of £150,000 or more.
Personal budget calculator
To see what effect the Budget will have on your own finances, try out our Budget 2009 calculator.
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