Three state pension rates and payments which WON’T rise in April – an annual uplift from the Labour party (Image: Getty)
Pensioners across the UK will face a reduction in their payments next April, as three key elements of the annual uplift announced by the Labour Party government won’t rise as expected.
Despite a general increase in state pensions, many pensioners will see tax deductions of at least 20% on the increase, meaning they will receive less than anticipated.
Approximately 12.9 million people receive a , with around 1.1 million living outside the UK.
That leaves roughly 11.8 million pensioners within the UK, and according to , around 8.5 million are currently paying income tax on their pension, meaning nearly three-quarters of all pensioners will be impacted by the new tax changes.
For many recently retired individuals, this will mean an after-tax increase of just £368, as opposed to the full £460 increase many had hoped for.
Pension expert Steve Webb, a partner at pension consultancy LCP, commented on the situation: “Part of next April’s increase is simply to keep pace with rising prices.
With current inflation sitting at 2.2%, the would need to rise by over £250 simply to maintain its value.
While an above-inflation increase of £460 will be welcomed, only £210 of that represents a true increase. And that’s before considering the income tax many pensioners will pay on the rise.
Those who lose £200 or £300 in Winter Fuel Payments will find themselves worse off in real terms next April.”
Deferred State Pension: A Smaller Rise
If you’ve reached age and choose to defer your pension, the extra sum you receive for deferring will not increase by the usual 4.1%. Instead, it will be adjusted based on the current inflation rate of just 1.7%.
This is significantly lower than the usual increase and could impact pensioners who rely on deferring their to boost their income.
Over-80s Additional Payment: Frozen Again
Another notable pension payment is the over-80s additional payment, which remains frozen at a meagre 25p.
This payment is unavailable to those who reach age after 6 April 2016.
To qualify, pensioners must meet strict criteria, including being 80 or older, not receiving the basic or having a basic of less than £101.55 per week in 2024/2025.
Additionally, the claimant must have lived in the UK for at least 10 years out of the past 20 years before their 80th birthday.
For those living in the European Economic Area (EEA) or Switzerland, eligibility for this pension will not depend on National Insurance contributions.
Christmas Bonus: A Long-Standing Perk Under Fire
Most of the UK’s 13 million pensioners receive a £10 Christmas Bonus each year.
While this tax-free gift has been a tradition for many years, critics argue that it’s outdated and offers very little value in today’s economy.
Originally set at £10, had the Christmas Bonus kept pace with inflation, it would now be worth approximately £160.
Some have argued that the Government could use the £10 bonus more effectively to support pensioners in other ways.
This small amount goes to all pensioners who receive certain benefits, yet the bonus remains a legacy of the past and may no longer serve as a meaningful perk for those in retirement.