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2019 State Pension changes: More money in your pocket

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In April 2019, there were changes made to the State Pension.
 
If you’re not up to speed on what they were, this is what you need to know. 
 

What you need to know

The most notable change is an increase in annual income. 
 

Single-tier State Pension

If you reached the age that qualifies you for your State Pension after April 2016, you’ll receive the Single-tier State Pension
 
The Single-tier State Pension is protected by something called the triple-lock. It means that your pension’s annual increase will be decided by the largest of the following:
 
- Consumer Price Index, which is used to measure inflation and announced in the September of the previous year
- Annual earnings growth, which is the average percentage growth in wages in Great Britain 
- 2.5%
 
So, if you receive the Single-tier State Pension, you’re currently guaranteed an annual increase of at least 2.5%. And the good news is that average earnings growth over the past 12 months was 2.6%1- so that’s what your Pension will increase by from April 2019.
 
In monetary terms, if you’re entitled to the full Single-tier State Pension, your weekly payments will increase to £168.601That’s an extra £4.25 a week or £221 a year.
 
If, however, you hit pension age before April 2016, your pension will be split into two parts; the Basic State Pension and the Additional State Pension – also known as the State Second Pension. 
 

Basic State Pension

To qualify for the Basic State Pension, you must have paid or been credited with National Insurance contributions. 
 
If you receive the full Basic State Pension, from April 2019, you’ll receive an extra £3.25 a week on top of the current £125.95. That translates to £169 a year, making your overall annual income £6,718.401
 

Additional State Pension

The Additional State Pension is an extra amount of money you could get on top of your Basic State Pension. If you’re eligible, you’ll be enrolled automatically unless you’ve contracted out of it
 
Unlike the Single-tier Pension, the Additional State Pension isn’t protected by the triple-lock. 
 
The annual increase is instead based on Consumer Price Index inflation, as announced in September of the previous year. This year, 2019/20, that meant a rise of 2.4%1
 
What’s more, the most you can earn from an Additional State Pension is capped. The annual increase saw that cap go from £172.28 to £176.411for the 2019/20 tax year. 
 

What other changes were there?

And from April 2019, there was an additional increase in Pension Credit. This is a means-tested benefit awarded to retired workers based on their earnings. It’s split into two parts, Guarantee Credit and Savings Credit. 

Guarantee Credit

This tops up your weekly income to make sure you receive a minimum sum. It’s set by the government which, in April 2019, increased the figure for a single person by £4.25 to £167.251
 
For a couple, those married, in a civil partnership or living together as if they were married, this now sits at £255.25 a week, up from £248.80 the previous year1
 

Savings Credit

Savings Credit is an extra payment from the government that rewards you for saving for retirement. 
 
From April 2019, the maximum you can receive as a single person now stands at £13.72 a week. For a couple it’s £15.35 a week. That’s a 32p or 36p rise respectively, based on the previous year1
 

Pension Lifetime Allowance

If you’re lucky enough to be concerned about reaching the cap of your Pension Lifetime Allowance, then there’s also some good news for you, too. 
 
Your Pension Lifetime Allowance is how much you can put into your retirement savings without paying tax. 
 
This also increased in line with Consumer Price Index inflation, from £1,030,000 to £1,055,000 in April 2019. That’s an extra £25,000 for you1
 

Future Changes

Although it’s impossible to accurately predict what the future brings, one thing is expected. The government is still planning to increase retirement age for men and women to 66 by October 2020. There are also further plans to increase it to 68 between 2037 and 20391
 

Could equity release help you overcome a low pension provision?

After a lifetime of work, the last thing you want to worry about is money. Retirement is meant to be a time of relaxation and reward. But if you’re concerned about cash, that will be hard to achieve.
 
Equity release could be one solution you’re looking for. 
 
By accessing some of the tax-free cash tied up in your home, you could enjoy the retirement you deserve. 
 
Paying off existing debts, booking that once-in-a-lifetime trip, help with day-to-day bills or clearing your existing mortgage; all have been made possible through equity release2.
 
If you’re aged 55-95 and own a property worth more than £70,000, then you could be eligible. 
 

Where does Key come in?

Key is an equity release adviser and broker. We dedicate our time, skill and expertise to helping you find the most suitable equity release plan. 
 
But before you take equity release, you first need to take expert advice, it’s a regulatory requirement. And that’s where we come in. To date, we’ve helped over 1 million people decide if equity release is right for them3
 
During your free, no-obligation appointment with one of our fully qualified equity release advisers, they will explain how equity release works and answer any questions you may have. Then, they’ll assess if equity release is right for you. If it’s not, they’ll tell you. 
 
So, what are you waiting for? Use our free calculator to see how much you could release. 
 
Alternatively, if you would like to arrange an appointment with your expert and local adviser, request a free call back now
 

What should you consider before taking out equity release?

Our independent, specialist equity release advisers compare products from the whole market to find the most suitable equity release plan for you. They’ll discuss all the options available to you and explain that taking an equity release plan reduces the value of your estate and may affect any means-tested benefits you’re eligible for.
 
With a lifetime mortgage, the most popular form of equity release, you’ll still own your home. It’s a loan secured against your home and is typically repaid when you, or the last surviving applicant, pass away or move into long-term care. 
 
All equity release plans we recommend have a no negative equity guarantee. That means you’ll never owe more than the value of your home.
 
You should always think carefully before securing a loan against your home. 
 
Key’s initial consultation is free with no obligation to proceed. If you decide to go ahead with an equity release plan, our advice fee (usually 1.99% of the amount released, subject to a minimum of £1,499) is payable only on completion.

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