Is the State Pension age rising to 75?

If you are already making plans for your retirement, the recent stories in the news may be worrying. However, you need to know that the idea of increasing the State Pension age to 75 was only a proposal. The UK government is not actually taking this action. This article will tell you everything you need to know about the current plan for State Pensions.

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A Guide to National Insurance

A Guide to National Insurance

What is National Insurance?

National Insurance is a form of tax which applies to your earnings for every pay period. This could be weekly or monthly according to your employer’s payment arrangements. It will be deducted from your wages along with Income Tax. If you are self-employed, you have to complete a Self Assessment tax return before paying both Income Tax and National Insurance Contributions. You must pay NIC if you are over 16 years old and in employment earning over £162 a week, or self-employment with a profit above £6,205 a year. You stop paying when you reach the State Pension age. If you don’t pay National Insurance contributions, you will not qualify to receive certain benefits. These include the State Pension, Jobseeker’s Allowance, Employment and Support Allowance, Maternity Allowance, and Bereavement Support. You need an NI number to pay.

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State Pension Age to Rise Again

Just when you thought it couldn’t get any higher, a new report released for the government has revealed that state pension age could rise again, leaving many people without a pension until the age of 70, meaning we will have to remain in work for longer than ever in order to qualify. The new rules are likely to affect those in work at the moment, under the age of 30. A second report, also released to the Government has stated that those under the age of 45 may also have to work a little extra. Those expecting to receive their state pension at the age of 67 will now have to wait an extra year until they are 68. Both repoperson of state pension agerts are a little up in the air at the moment and it is thought that it will be properly decided later on in May when the government is due to make a decision.

It seems there are a number of factors that are contributing to the rise in cost of state pensions and it is something that ministers are now being forced to address seriously. Pension costs are rising due to things such as longer life expectancy, and the growing ratio of pensioners to people in work. The rise in cost may leave ministers with no choice but to push back the state pension age so that pensions remain affordable to fund. It is thought that at least six million people will be faced with the prospect of having to work longer. The news will be most distressing to those in their early forties who have perhaps planned ahead for retirement, only to find they will need to add another year onto this. Those that are 30 or younger will have the expectation of retiring at seventy reinforced, an extra two years later than the current age. It is thought that the state pension age could rise as soon as 2054 (although this is an extreme scenario). The current rise is the state pension age rising to 68 for those born after 1978. This rise is due to be put into effect by 2046 but could be brought forward to 2039, which will, of course, affect a wider range of people.

The Current Figures

State Pension Age, much to the annoyance of workers, has experienced significant raises in the past couple of years and it looks like it isn’t going to stop anytime soon. Between 2018 and 2020 the state pension age (currently 65) is set to rise to 66, closely followed by 67 between 2026 and 2028 and then to 68 by 2046. According to ministers, the reason for the gradual raises is to smooth out the process as well as trying to make the future both fair and sustainable for the younger generation. Whilst this may seem maintainable, the calls for the 2046 date to be pulled forward are getting harder and harder to ignore as state pensions become increasingly expensive (as mentioned above). New calls have called for the state pension age to rise over a two-year period – beginning in 2037 and ending in 2039.

At the moment, the State Pension Age is under ‘triple lock’ but there are fears that this protection could soon come to an end. The triple lock protects pension payments for rising in line with whatever the national average wage is at the time as well as inflation and 2.5%.


Theresa May’s Benefit Challenge

Monday marked yet another historical day for Britain, as Angela Leadsom stepped down, leaving a proud Theresa may as current PM David Cameron’s successor. Today, David Cameron moves out, and Theresa May moves into the infamous Number 10, as she attempts to pick up where he left off, guiding Britain slowly but surely out of the EU, whether we like it or not. Becoming Prime minister at such a tumultuous time for Britain will certainly be no easy feat, and Theresa May already has a to-do list from hell as she gets her feet snugly under the Downing Street table. With a new Prime minister in our midst, how will the change of hands affect the day to day lives of those living off pension and benefit payments? Will the change be for the better? Or will harsh cuts continue to leave people financially unstable?

Universal Credit

Unfortunately for low-paid  working families, there are plans for the cuts to tax credits that had seemingly been abandoned by Iain Duncan Smith, to be re-started. The re-introduction of the controversial cuts is said to hit those that need financial support most, with a loss of £3000 a year by 2020. Furthermore, it could be said that the Universal Credit programme has been nothing but hassle since it was initially introduced. The transition from other benefits included Job Seeker’s Allowance to Universal Credit has been complicated and not exactly greeted with open arms as a positive change. As a result, the procedure has been massively delayed and is thought to become one of the biggest challenged for Theresa May to put straight. Parliament have in the past, attempted to discover why there have been delays with Universal Credit and have even accused the DWP of being evasive with their responses. It has been announced that Universal Credit will not be implemented fully until 2021, 4 years after its starting date. The lack of transparency the DWP has provided into the progress of Universal Credit has been seen as unacceptable by many MP’s.

Admittedly, the new system is a lengthy process, with all six existing benefits received by claimants being rolled into one. This calls for complicated IT system and change in the financial routine of 500, 000 people. The Universal Credit system does ultimately account for lower in-work benefits for working families and so when Theresa May attempts to get the enforcement in order, she is likely to be met with backlash, particularly from less than happy claimants. There has been much concern over the sudden and steep withdrawal of benefits, that no doubt May will have to address.

Pension Cuts

Theresa May, will also face an extremely tough decision with her new position of power, dealing with votes for pension cuts after years of annual rises for pensioners. Now she is leading Britain out of the EU, it is likely Theresa may will have the backing of Britain’s older generation. However, with a decision to cut pensions looming, will the support remain amicable? Reports have shown that rates from annuity firms fell by 2% after Brexit was announced, showing a possible glimpse into the future negative effects Brexit may have on pensions and those saving for retirement. With Priti Patel, a female work and pensions minister, set to be appointed by May into the cabinet, could things be about to change?

Reports that have looked into the falling annuity rates have suggested that it could continue, as a post-Brexit recession means that the funding is simply not there, and pressure will be placed on tax revenues, which are needed to pay state pensions. It has been suggested that the changes will affect those that are not already retired, meaning that Theresa May will have to work hard to support the financial futures of those still in work, saving for their future. The promised ‘triple-lock’ on pensions (increasing the payment with price and wage inflation) may now not be possible in the wake of a Brexit. This promise was also made by the now-resigned David Cameron.

As the Prime minister attends his last parliamentary meeting and bids goodbye to the country, we wait with baited breath to see what Theresa may has in store.

How To Avoid HMRC Scams

HMRC scamsUK police are warning members of the public this week over scam emails which intend to steal money. The emails, claiming to be from HMRC, include links to websites that look very similar to the HMRC website. There have been hundreds of reports nationally this week about fake emails from HMRC. The emails tell victims that they’re owed money from the Government agency, and ask for personal details, along with bank details and even password information. Both the police and HMRC want to raise awareness to these types of scams.

Action Fraud, a UK scam busting agency, has received hundreds of reports so far this year, and believe that fraudsters are trying to take advantage of the new tax year changes. A spokesperson for HMRC has said that the agency will never contact people by email or text to ask for personal details. Customers will also never be asked to pay for a visa via cash payments or a money transfer. HMRC have also said that they shut down more than 14 000 sites last year, sites which they said are looking “more and more legitimate”. Action Fraud are also on board with the campaign to raise awareness of money-stealing scams.

Scam emails, claiming to be from HMRC, can link to any service they provide, which you can usually get for free or cheaper than how the scammers are marketing it for. For example, some scammers are trying to sell passports and European Health Insurance cards at a heightened price.

HMRC scamsThis all comes after the arrest of 8 men who have been sentenced following a £1m telephone scam. The men targeted pensioners across the UK, and used the money they obtained to fund people travelling to Syria, some of which have cropped up as ISIS members. One woman, Elizabeth Curtis, 73, lost just over £130 000 of her savings. The men used the guise of ringing her up pretending to be a member of the police. They asked Elizabeth to transfer funds to other accounts, as they believed she was under threat from her bank, who could be stealing her money. A spokesperson for HMRC has said that they believe over half a million pensioners have been affected by the scam, and that the vast majority of victims will be unable to receive their money back. Angela Brooks, the Chairman of Pension Life, noted that the scamming situation in the UK is “out of control” and that she has made complaints to the pensions ombudsman before about the issue.

How To Avoid HMRC Scams

  • Type in website addresses yourself. If you’re wary of any links in emails, type them into google and see what kind of results you get. You may find forums of people asking for information on them as well.
  • Avoid clicking links in emails sent to you by people claiming to work for HMRC. They will never send emails or texts asking for money.
  • If in doubt, message the HMRC twitter account, who can tell you straight away if the email or text is legitimate or not.
  • Think before you click. If you see that the individual sending you the email is a jumble of letters or numbers, the email will usually be fake. Try googling the email address, you’ll find that there might be a few people talking about fake emails relating to that email address.

HMRC warn against using shared computers, for example those found in internet cafes or work computers. This is because some passwords may be automatically saved by the browser you’re using. The government agency have also issued a statement saying they plan on tightening security with their 2 factor Authentication system, which is meant to reduce fraud risk. If you have any doubts about any emails or texts you have received, you should contact HMRC.