Budget 2013: Flat rate pension to arrive a year early

Chancellor George Osborne has brought forward the introduction of the flat rate pension and the cap for long-term care by a year to April 2016.

The new pension date has been particularly welcomed by women born between 6 April and 5 July 1953, who have seen their pension age upped twice and would have been ineligible for the £144 flat rate pension had it not come in until 2017.

They will be around £9 a week better off than they would have been under the old system.

Reacting to the news, Joanne Segars, chief Executive of The National Association of Pension Funds (NAPF), said: We strongly welcome proposals for a new, single-tier state pension. But the government has to ensure that the changes are implemented in a way that does not damage company pension schemes. This is a very tight timeframe and we question whether it can be delivered. Schemes need flexibility and time to adapt.

If the government gets it wrong then it risks sparking a fresh round of final salary pension closures in the private sector. Businesses that get caught on the wrong side of these changes will lose a significant rebate from the end of contracting out, and this extra cost may prompt them to close their pensions altogether.

We have waited many years for these reforms... It would be a shame if mistakes were made in a rush to implement the changes.

Meanwhile, the cap on social care costs, which was also set to come in during April 2017 at £75,000 will now arrive in 2016 at £72,000.

This means that individuals will have to pay the first £72,000 of their social care costs, with the government footing the bill for the remainder of their lives.

However, research from the Equity Release Council out today found that among the over 60s, almost half think the government should meet the full costs of late life care. The research also revealed nearly a fifth of UK adults feel that support for care costs, as well as residential costs, should be means-tested.

Find the best annuity rate for your circumstances

Greater certainty for retirees

Commenting on the reforms, Patrick Connolly, spokesperson for AWD Chase de Vere, said: "The decisions to bring forward the implementation of a universal state pension and the social care cap are both welcomed. Both should provide greater certainty for those planning for their own retirement or for their relatives.

He added: "The social care cap will allow people to plan for care costs without facing potentially open-ended liabilities, while the universal state pension should effectively herald the end of means testing in retirement and so people should benefit from every penny that they manage to save for themselves."

Published: 20 March 2013
Last updated: 20 March 2013

More About

Leave a comment