The earlier implementation of the flat rate pension was the only major Budget announcement affecting pensioners.
However, there was confirmation of other measures taking effect, while fears of another crackdown on pension contribution ceilings turned out to be unfounded and calls for a U-turn on the so-called “granny tax” fell on deaf ears.
Here’s a round-up of the Budget measures affecting pensioners and the changes coming into force with the new tax year on 6 April:
• The universal state pension of £144 a week (in today’s money) will be introduced in April 2016, a year earlier than previously scheduled.
• The basic state pension will go up by just 2.5 per cent on 6 April, 2013, rising to £110.15 a week.
• The income tax personal allowance will rise to £9,440 on 6 April and to £10,000 in April 2014. However, the age-related personal allowance is being frozen at £10,500 and £10,600 for over 65s and over 75s respectively.
• The government signalled that more quantitative easing (QE) is on the way. By being used to buy gilts, this has pushed down the yield on those gilts. Because annuity rates are based largely on gilt yields these have also fallen, so QE has resulted in retirees getting less income from their pension pot.
• Thousands of Equitable Life policyholders previously left out of the redress pot are to get £5,000 in compensation, it was confirmed in the Budget papers.