Budget 2013: What's new for pensioners


George Osborne on Downing StreetBudget 2013: What it means for you

The flat-rate or "single tier" state pension will come in a year earlier than planned, Chancellor George Osborne confirmed today.

The £144-a-week payments, which the Government claims will prevent working mothers being penalised for taking a break to raise children, will now start in 2016.

Pensioners will also benefit from a social care spending cap, designed to protect their savings above £72,000, from the same year. Here, we explain how these changes will affect you.

Flat-rate state pensions
In today's Budget, Osborne confirmed the flat-rate state pension of £144 per week will begin in 2016, ending contracting out of defined benefit schemes.

Under the planned pensions transformation, all Britons of state pension age will get a 'flat-rate' pension worth about £144 a week in today's money - as long as they have paid at least 35 years of NICs.

And the Budget document claims that 90% of those who hit state pension age before 2036 will be better off as a result of the decision to bring this in a year earlier.

"An individual who is 40 years old when single tier is introduced in 2016 would contribute an extra £6,000 of National Insurance Contributions (NICs) before reaching state pension age in 2043," it said. "But they would gain £24,000 in extra state pension over the course of their retirement."

Download this helpful guide: 10 tips to improving your pension.

Social care costs
Osborne also used his Budget speech to confirm that a new £72,000 cap on individual social care costs will now come into effect in 2016, not 2017 as planned.

"It will be set to protect savings above £72,000, and we'll raise the threshold for the means test on residential care from just over £23,000 to £118,000 that year too," he said.

This is good news for older people who have saved for retirement, as is the fact that there were no further announcements on private pensions, into which the maximum you can save each year is already set to fall from £50,000 to £40,000.

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