New Pension Age Rise to 66 Years

New pension age rise introduced for 2016

The new Government has proposed that a new pension age threshold will come into force from 2016.

The new pension age threshold is set to rise to 66 years for men by 2016 and by a further two years to 68 by 2048.

Work and Pensions Secretary Ian Duncan Smith said on the new pension age rise:

“People are living longer and healthier lives than ever, and the last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary age limit.

We also need to recognise that to meet the challenge of providing an affordable, stable pensions system in a society with ever increasing life expectancy, people will need to work longer.”

The government is also in talks to phase out the current default retirement age to ensure those who want to work past 65 are able to do so.

Key points from June’s Budget, 2010

VAT
VAT rate will rise from 17.5% to 20% from January 4, 2011

Tax

Tax credits have been reduced for families earning over £40,000 next year

Low income families will see an increase in Child Tax Credit

There will be no new increase on alcohol, tobacco or fuel taxes

Council tax could be frozen for one year from April 2011 in England

Benefits

Child benefit will be frozen for the next three years

Unemployed people will see their Housing Benefit cut by 10% after 12 months of claiming Jobseekers Allowance from April 2013

Public Sector

Public sector workers face a two-year pay freeze if they earn over £21,000

Public sector workers earning less than £21,000 to be paid £250 extra each year for two years

Plans to cut the Deficit

Chancellor George Osborne plans to cut the structural deficit anticipate a fall of 1.1% of gross domestic product (GDP) by 2015/16 compared to a deficit 10.1% of GDP in 2011.