As we are about to enter the second half of 2022, Steven Cameron, Pensions Director at Aegon, highlights 6 pension and personal finance dates to look out for.
- July – National Insurance threshold rise.
- July – Household on means tested benefits receive first cost-of-living payment.
- September – Pensions Engagement Season.
- October – September’s Inflation figure (published October) determines next April’s uprating in benefits, including the state pension.
- October – 10-year anniversary of pensions auto-enrolment.
- Autumn Budget (TBC October/November).
Steven Cameron, Pensions Director at Aegon, comments:
July – National Insurance threshold rise
“Many individuals will have seen their take-home fall from April due to the 1.25 percentage point increase in National Insurance contributions, but there’s some welcome relief coming in from July when the lower threshold of earnings on which employees pay National Insurance increases by £2,690 to £12,570. This will mean anyone earning under £12,570 will no longer pay NICs. For those above this level of earnings, it will mean an extra £29.70 per month in take-home pay.
“The threshold rise will offer some small relief to individuals when prices are rising at the fastest rate for 40 years. In further good news, even those who will no longer pay NICs will still receive a credit towards their future state pension as long as they earn above £6,396 a year*.”
July – Household on means tested benefits receive first cost-of-living payment
“Under huge pressure to act on soaring prices, in May the Chancellor announced an additional £15bn cost-of-living support package targeted to help those most in need. This included a one-off payment of £650 for those on means-tested benefits paid in two lump sum instalments, the first in July and the second in the autumn.
“Pensioners who are in receipt of pension credit qualify for the £650 one-off payment. However, to be entitled to the first instalment in July, they need to already be receiving pension credit or have begun a claim which is later successful as of 25th May. The government hasn’t yet set the eligibility date for the second instalment so there may still be time to put in a claim. Following on from the government’s ‘pension credit day of action’ campaign, we hope this can be used as another means of encouraging more pensioners to claim what’s rightfully theirs.”
September – Pensions Engagement Season
“Pensions can often seem daunting for those who don’t know where to start when thinking about planning for retirement, so it is important that the industry engages with individuals in a clear and meaningful way. Pensions engagement season will run throughout autumn and winter as a concerted initiative from the industry with support from the government to encourage people to engage with their pension.
“Pensions engagement season will kick start in September with the annual Pensions Awareness week, run by the Pension Geeks, as a good opportunity to connect people with their pensions in a fun and energised way and help them to understand the basics.”
October – Inflation figure determines next April’s uprating in benefits
“In the past when inflation was relatively low and stable, few people paid much attention to exactly when the yearly uprating of benefits was calculated. But amid the current cost-of-living crisis all eyes will be on the date in October when September’s inflation (Consumer Prices Index) figure is published. It’s this inflation figure which is used to determine increases in many ‘inflation-linked’ benefits, including the state pension, from the following April**.
“In April 2022, this meant state pensions and certain other benefits increased by 3.1%, the inflation figure from September 2021. This was a huge 5.9% lower than, or around just one third of, April’s actual inflation rate of 9%. But with prices expected to continue rising towards the end of the year, this September’s inflation figure could deliver a double-digit increase in April 2023.
“With the government recommitting to the state pension triple lock formula after dropping the earnings link in 2022, this could mean the biggest increase ever in state pensions. If inflation was 10%, this could mean an increase of £18.50 per week. This will be particularly welcome for the many pensioners relying on the state pension who have a long winter ahead with their state pension falling far below price increases.”
October – 10-year anniversary of pensions auto-enrolment
“October is a significant milestone for workplace pensions as it marks 10 years since the introduction of the government’s flagship auto-enrolment policy. Auto-enrolment has been hugely successful in increasing pension participation throughout the UK, with more than 10 million employees benefiting from an employer contribution. This is rightly cause for celebration and a good prompt for individuals to check how much they have built up in their workplace pension.
“However, saving at the minimum contribution levels set by auto-enrolment won’t provide a generous retirement income and many people will need to pay more to fund the retirement they aspire to.
“Furthermore, there are some other enhancements we’d like to see made as soon as possible. Currently, too many people are excluded from auto-enrolment as they are too young (under age 22), too old (above state pension age), don’t earn enough (under £10,000 per job) or are self-employed.
“The world of work has shifted dramatically since auto-enrolment was first designed in 2008 with the rise of the gig economy, zero hours contracts and many more self-employed workers. We’d like the government to ‘level up’ auto-enrolment and make it more inclusive by making pension saving the norm for even more people.”
Autumn Budget (TBC October/November)
“With inflation expected to peak towards the end of the year and a further energy price cap rise due in October, the Autumn Budget is likely to take place amid the worst of the cost-of-living crisis. Inflation is already sitting at its highest level for four decades and could well be into double digits by the time the Chancellor stands at the despatch box.
“The government’s recent cost of living support package is offering targeted relief, to help ease some of the financial pressure on the most vulnerable households, but with no sign of inflation cooling, millions will still struggle to cope with rising prices.
“Alongside addressing immediate priorities, the Budget may also give an indication of the government’s direction for tax and spending in the build-up to the next general election.”
