Pension rise, tax freeze, age entitlement changes, Railwayana

PENSIONERS SHORT CHANGED
A letter will soon be dropping through the letterbox of more than 12 million older people telling them that parts of their state pension will not be increased in April. Although the basic state pension will rise by 2.5% - which will add £2.40 onto the current full rate of £95.25 – all the other bits of the pension including SERPS, graduated pension, extra pension for deferring retirement and the increase which can be claimed for an adult dependant will be frozen at their 2009 rate.

If you get a reduced pension because you have not paid enough contributions you will get less than £2.40. A woman claiming a pension on her husband’s contributions will normally get an extra £1.45.

Someone who has the full basic pension topped up by a typical SERPS and graduated pension totalling £33 a week will see their total pension rise by less than 2% rather than the 2.5% many thought they had been promised by the Chancellor in his Budget speech.

On 9 December Alistair Darling told Parliament that inflation last September measured by the Retail Prices Index was negative. This September index is used to fix benefits the following April. And that should mean benefits would be frozen in 2010. Then he said “I do not believe that such a freeze would be fair. So I can confirm the basic state pension will not be frozen, but will rise by 2.5 per cent in April.”

The Chancellor’s get-out word there was ‘basic’. The basic state pension will rise by 2.5%. Any part of the state pension that does not count as ‘basic’ will not and will indeed be frozen.

This piece of meanness will cost a man average SERPS nearly £42 a year. Those on the highest SERPS – which can exceed £150 a week – will lose more than £200 over the whole year. It will save the Government about £350 million off the cost of retirement pensions in 2010/11.

These additions to the state pension – and several others which are now paid to very few people – are the only benefits which will be frozen in April. Pension Credit will go up by 2% raising the minimum guaranteed income to £132.60 a week for a single person and £202.40 for a couple. Means tested benefits for younger people such as income support and jobseeker’s allowance will rise by 1.8%. All the other main benefits, including Child Benefit, disability benefits, and carer’s allowance are normally linked to the Retail Prices Index as measured in September. Instead Alistair Darling announced they would rise by 1.5%.

But in another economy with the truth that 1.5% rise will in fact be taken back from the rise due to be paid in April 2011. That will follow the RPI in September 2010 which the Government estimates will be 3%. But in April 2011 instead of rising by the full RPI, benefits will rise by the RPI minus the 1.5% given in April 2010.

Tax changes
Almost all tax allowances are being frozen and will not rise in 2010/11. So the Inheritance Tax threshold will stay at £325,000. With rising house prices more estates will be dragged into its net. Personal allowances will be frozen including those for the over 65s. So for the millions of taxpayers who also get a state pension the extra £2.40 on their pension will be worth just £1.92 after basic rate tax.

Another tax will hit everyone with a telephone. From 1 October 2010 a new ‘Landline Duty’ of 50p a month or £6 a year will be added to every fixed line phone bill – including cable services. The new tax will raise £175 million a year which is going to be spent on bringing broadband computer services to people in rural areas. The tax will not to apply to mobile phones.

Rising pension age
SINCE THIS STORY WAS WRITTEN GOVERNMENT POLICY HAS CHANGED AND THE AGE TO QUALIFY FOR PRESCRIPTION CHARGES IN ENGLAND WILL NOT RISE IN THIS WAY. FURTHER DETAILS ARE NOT YET KNOWN.

NB THAT NHS PRESCRIPTIONS ARE FREE FOR ALL AGES IN WALES AND WILL BE FREE FOR ALL IN NORTHERN IRELAND FROM 6 APRIL 2010. IN SCOTLAND THE CHARGE WILL BE £3 AND THE QUALIFYING AGE WILL NOT CHANGE WITH PENSION AGE.

From April the age at which women can claim their state pension will go up month by month until in April 2020 it will reach 65 for those born on 6 April 1955 or later. Entitlement to pension credit – currently age 60 for men and women – will follow state pension age for women and the Government has now announced that to free bus travel and free NHS prescriptions will also rise from April in the same way. Entitlement to all these things will happen on set dates as shown in the table below for people who reach 60 in 2010/11. As all claims for bus passes will be concentrated on one day every two months it is likely that councils will get very busy and there may well be delays.

Whatever your date of birth you can check on your date of entitlement at http://pensions.direct.gov.uk/en/state-pension-age-calculator/home.asp – for everything except state pension men should put their gender as ‘female’.

The new rules mean that the 56-year-old Chancellor of the Exchequer Alistair Darling will have to wait until 6 July 2017 when he is 63 years and seven months to get his bus pass and free NHS prescriptions. [SEE NOTES ABOVE].

The winter fuel payment will also be subject to these rules. This coming winter you will have to be born on 5 July 1950 or earlier to qualify for it.

The change does not affect anyone born before 6 April 1950.

RAILWAYANA
Old artefacts from railways can fetch good money. Railwayana.net is an online auction site with four sales a year. The next one is this month and there are expected to be up to 400 varied lots from station names to plates from steam engines.

In November’s sale cheaper items were a GCR brass Acme permanent way whistle (£50) [lot 81] and a North Eastern Railway director’s ivory rail pass (£100) [lot 272].  A cabside number plate in brass fetched £1700 [lot 14]. But the star of the sale was a British Rail Mortehoe & Woolacombe station sign [Lot 225] which fetched £10,600.

Founder of railwayana.net and collector Chris France says “Things turn up all the time in garages and attics. Everyone who worked on the railway has something, though most of them are not valuable. Locomotive nameplates are the most exciting items especially ones that haven’t been seen before. Some turn up in the original sacking they were wrapped up in when they first sold, usually for every little, when the engine was broken up.”

railwayana.net offers a free valuation service. From 2010 buyers will pay a premium of 5% or 10% of the hammer price depending on the lot and sellers pay 5% of the hammer price. The next auction ends on 21 February and you can bid online or by phone. More information and details of the items on sale www.railwayana.net.

February 2010