Millions of retired people will be affected by four pension changes this year.
According to the Independent, a set of new rules will prevent people from losing money on small pension pots worth less than £100 and the state pension will increase in 2022.
British citizens living in some countries, however, will not be eligible to count their time abroad on their state pension.
In 2022, pensions will be changed as follows:
Small Pension Pots No Longer Subject to Flat Fees
To avoid “rip-off” charges, small pension pots will no longer have flat fees too.
Those who have accumulated their pension fund through auto-enrolment schemes while using small workplace funds will benefit from the change.
The State Pension Will Increase by £290
The additional pension change goes as follows. As of April of this year, the new state pension will be increased by £290 per year.
This increase corresponds to the 3.1% inflation rate in September. With the increase in $290, the state pension will rise to $185.15 a week, from £179.60.
The increase is about £9,339 per year to around £9,628 per year.
This change is following the government’s decision to scrap the triple lock, which normally guaranteed the state pensions would increase by either the highest of inflation, or average earnings growth, or by 2.5%.
However, it has been reduced to a double lock because workers returned from furlough, as earnings would have increased by 8% after the pandemic.
The old state pension is currently £7,1552.20 per year for those who reached pensionable age before 6 April 2016.
Nearly £279 will be added to the Pension Credit
This year, couples who qualify will be able to get up to £278.70 per week in pension credit.
Those over the state pension age and living on a low income can use this to help cover their living costs.
The maximum pension credit you can get is £177.10 per week if you’re single, or £270.30 if you’re married.
For single retirees, this will increase to £182.60 from April 2022 onward, and for couples, to £278.70.
British Citizens Living Abroad Now Have new State Pension Rules
The state pension fund will not count time lived abroad in the following countries. This is about a citizen’s state pension fund, precisely, if they have moved to, live in, or move between, an EU or EEA country or Switzerland from January 2022:
- New Zealand
- Australia (before 1 March 2001)
Those who stay in the UK or move to an EU, EEA, or Swiss country by 31 December 2021 will not be affected.
You can still calculate your state pension based on time spent living in Australia (before 1 March 2001), Canada, or New Zealand as long as you continue to live in the same country.
Having a National Insurance record of at least 10 years is necessary to qualify for a state pension portion or 35 years for the full amount.