What is meant by pension scheme?
Pension funds, which are also known as retirement funds, is a kind of savings scheme where you (as an employee) invest a small portion of your income/salary into a designated savings plan. ... A pension plan will help you get an income and support your family when you have no other income source.
What is the purpose of a pension scheme?
The definition of a pension scheme is it's a type of long-term savings plan. And it's a tax-efficient way to save money during your working life. You save some of your income regularly during your working life. This gives you an income in later life, when you want to work less or retire.
How much extra state pension could you get next year?
A 3.1%increase in the full new state pension will take the full payment in 2022-23to: £185.20 a week (£9,630 a year) that’s an increase from £179.60 a week(£9,339) in the current tax year.
How much is the state pension increasing by?
Up until September 2021, pensioners looked set to enjoy an 8% increase in the state pension next year.
This is because the state pension is determined by what’s known as the triple lock, which means each tax year payments are increased in line with whichever is the higher of the following three:
· 2.5%
· The rate of inflation (measured by the consumer price index in the year to September)
· Average earnings/wage growth
Why has the triple lock been suspended?
The coronavirus has skewed wages since the onset of the pandemic more than 16 months ago. Millions of workers have been on a reduced wage through furlough as businesses scaled back during the various lockdowns. But businesses are now opening up again, which has caused an unusual spike in wage growth as workers go back to full pay.
Official figures show average UK earnings grew by an annual 7.3% in the March to May period. The Office for Budget Responsibility expects this to rise to 8% in the May-July quarter, the period used to determine the state pension rise. If the government had committed to the rules of the triple lock an 8% rise would have been applied to the state pension from next April.
But there were mounting concerns about such significant increases at a time when the government’s finances have been put under huge strain by the pandemic. In June, a spokesperson for the prime minister said the government was “committed to the triple lock”. But the government U-turned on this in September and decided to suspend the triple lock guarantee for the 2022/23 tax year. The decision aims to reflect fairness for taxpayers, who are set to see an increase in national insurance contributions.
State pension rule changes for those working abroad
From January 2022, British citizens working abroad in certain countries can no longer count this time as qualifying years on their state pension record. This will affect British citizens who are living in:
· Australia(before 1 March 2001)
· Canada
· New Zealand
For more information or advice about pension scheme, we are here to help. Please do not hesitate to contact us.
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