Sir Nicholas Soames MP has welcomed the biggest reform of the state pension since it was created more than a century ago, alongside a major package of reforms to tax, pensions and savings to help workers, which came into effect this week.

From the 6^th April 2016 – eligible people in Mid Sussex who reach retirement age will receive the new State Pension, with the full rate set at £155.65 per week, or over £8,000 a year.

The new State Pension particularly benefits women reaching pension age over the next decade. In the past, many were unable to build much of the previous earnings-related additional State Pension – from now on, everyone will build up the new State Pension in the same way. Over 75 per cent of women and over 70 per cent of men will gain in the first 15 years of the new State Pension, and by 2030 over three million women stand to gain an average of over £550 extra per year as a result of these changes.

The new pension is among a number of reforms to taxes, National Insurance allowances and savings coming into effect this week to back hard work, support savers and ensure economic security at every stage of life. This includes a new personal savings allowance that means most people will be able to earn up to £1,000 interest a year on their savings without paying tax. Over 18 million are set to benefit, with nearly 17 million taken out of savings tax altogether.

The tax free personal allowance also increases from £10,600 to £11,000, giving an £80 tax cut to a typical taxpayer in Mid Sussex, while the higher rate threshold rises to £43,000, delivering on the Conservatives’ commitment that working people will keep more of the money they earn. An estimated 1,098 low-earners in Mid Sussex will be taken out of paying income tax altogether today, while 54,637 people in Mid Sussex will see their income tax cut.

Nicholas Soames said; “We are committed to supporting people at every stage of their life, which means helping hardworking people keep more of the money they earn and providing dignity and security in retirement.

“The new State Pension will provide clarity and confidence for people across Mid Sussex about what income they will get from the state in their retirement while helping those who have historically lost out under the old system.

“It’s great news that 54,637 people in Mid Sussex will receive an income tax cut today and 1,098 low-earners will be taken out of income tax altogether as we continue to back people who are working hard, saving hard, and doing the right thing.”

Notes

• The new State Pension comes into effect from 6 April 2016. Eligible people who reach retirement age on or after 6 April 2016 will receive the new State Pension. With the full new State Pension set at £155.65 per week, an individual’s National Insurance record is used to calculate the exact amount they receive. Usually, 10 qualifying years will be needed to get any new State Pension and the amount received will vary depending on your National Insurance record (HMT, The new State Pension, accessed 5 April 2016, link).
• Millions to benefit from new State Pension. Data released earlier this year revealed that over 75 per cent of women and over 70 per cent of men are set to gain from the new State Pension in the first 15 years. As well, the new system will boost the State Pension for many women, with over 3 million receiving an average of £11 more per week by 2030 or over £550 per year (DWP press release, 14 January 2016, link).
• Basic State Pension to see biggest rise for 15 years. On 6 April 2016, the basic State Pension will once again be increased by the triple lock. This means that a full basic State Pension will rise to £119.30 a week, an increase of £3.35 and the biggest real terms increase to the basic State Pension since 2001 (HMT, Spending Review and Autumn Statement 2015, 25 November 2015, link).
• Personal Savings Allowance. As announced at March Budget 2015, the Government is introducing an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for basic rate taxpayers and up to £500 for higher rate taxpayers. Additional rate taxpayers will not receive an allowance. Over 18 million are set to benefit, with nearly 17 million taken out of savings tax altogether. (HMT, Budget 2015, 18 March 2015, link; HMT, Budget 2016, 16 March 2016, link).
• Tax-free personal allowance to rise to £11,000 on 6 April 2016. In the Summer Budget 2015, the Chancellor announced that the tax-free personal allowance would rise from £10,600 to £11,000 from 6 April 2016 – an £80 tax cut for a typical taxpayer – and the higher rate threshold would rise from £42,385 to £43,000 (HMT, Summer Budget 2015, 8 July 2015, link; HMT press release, 6 April 2016, link).

Constituency estimates

• These estimates are modelled using regional statistics from HM Treasury and ONS constituency population statistics. The figures estimate the number of people who will benefit from lower income tax, as well as the number who will be taken out of tax, by a rise in the personal allowance to £11,000 and the rise in the higher rate threshold to £43,000 in 2016/17 compared to 2015/16.