State pension: Full details on changes arriving in 2021 – payments, pension credit & dates

Martin Lewis discusses pension credit 'top-up'

State pension payments will be increasing from April 2021, the start of the new financial year. These changes will impact all retirees regardless of whether they’re claiming the new state pension, the old state pension or pension credit.

New state pension

Most retirees will now receive payments under the new state pension, which was introduced in 2016.

What’s received can be affected by when a claimant retires and if they’ll get their payments altered under a combination of new and old rules, with all of the rate changes for this being outlined below:

  • Full rate – from £175.20 now to £179.60 in 2021
  • Transitional rate below full rate – the current rate is 3.9146 percent and it will be 2.5114 percent in 2021
  • Protected payment – the current rate is 1.7 percent and it will be 0.5 percent in 2021
  • Increments – own (based on deferred new state pension) – the current rate is 1.7 percent and it will be 0.5 percent in 2021
  • Increments – inherited (based on deferred old State Pension) – the current rate is 1.7 percent and it will be 0.5 percent in 2021

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Old/basic state pension

Changes for those receiving the old state pension will be more complicated.

Those receiving the old state pension will have their payments broken down into different categories and these categories will see their rates changed as follows:

  • Category A or B basic pension – from £134.25 now to £137.60 in 2021
  • Category B (lower) basic pension – spouse or civil partner’s insurance – from £80.45 now to £82.45 in 2021
  • Category C or D – non-contributory – from £80.45 now to £82.45 in 2021

Additional pensions will also see their rates reduce from 1.7 percent now to 0.5 percent in 2021, with the maximum additional pension (own and inherited) seeing their rates rise from £179.41 to £180.31.

increments for basic pension, additional pension, graduated retirement benefit and inheritable lump sum will also see their rates lower from 1.7 percent to 0.5 percent in 2021.

Graduated retirement benefit as a unit will see it’s rate increase from 0.1140 to 0.1447 percent.

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Age related changes

For old/basic state pension claimants, age related rules will be factored into what’s paid out, with increase of long term incapacity for age rates reducing from 1.7 percent to 0.5 percent.

This will push higher rates of increased long term incapacity for age from £23.30 now to £23.40 in 2021, with the lower rate going from £11.70 to £11.75.

Some basic state pension claimants may receive additional payments when they reach 80 but rates for this will not change in 2021.

Invalidity allowance (transitional) for state pension recipients will see the following changes:

  • Higher rate – from £23.30 now to £23.40 in 2021
  • Middle rate – from £14.90 now to £15 in 2021
  • Lower rate – from £7.45 now to £7.50 in 2021

Pension credit

Pension credit can be awarded to those who are on a particularly low income in retirement and the payments can come in or be affected by many elements.

The standard minimum guarantee rates for pension credit will change as follows:

  • Single – from £173.75 now to £177.10 in 2021
  • Couple – from £265.20 now to £270.30 in 2021

Additional amounts provided for severe disabilities and carers will also have their rates rise:

  • Additional amount for severe disability for single claimants – from £66.95 now to £67.30 in 2021
  • Additional amount for severe disability for couples (where one qualifies) – – from £66.95 now to £67.30 in 2021
  • Additional amount for severe disability for couples (where both qualify) – from £133.90 now to £134.60 in 2021
  • Additional amount for carers – from £37.50 now to £37.70 in 2021

Some pension credit claimants may recieve an additional payment from what is known as savings credit if they’ve put money aside for retirement.

These payments will be based on a persons relationship status and the four rates involved will be increasing next year:

  • Threshold – single -from £150.47 now to £153.70 in 2021
  • Threshold – couple – from £239.17 now to £244.12 in 2021
  • Maximum – single from £13.97 now to £14.04 in 2021
  • Maximum – couple – from £15.62 now to £15.71 in 2021

Having children, being in a polygamous marriage and non-state pension considerations will also impact pension credit in the coming year.

As the following details explain:

  • First child born before April 6 2017 – from £64.82 now to £65.10 in 2021
  • Subsequent children – from £54.32 now to £54.60 in 2021
  • Disabled child lower rate – from £29.52 now to £65.10 in 2021
  • Disabled child higher rate – from £92.12 now to £92.54 in 2021
  • Amount for claimant and first spouse in polygamous marriage – from £265.20 now to £270.30 in 2021
  • Additional amount for additional spouse – from £91.45 now to £93.20 in 2021
  • Non-state pensions (for pension credit purposes) statutory minimum increase to non-state pensions – from 1.7 percent now to 0.5 percent in 2021

State pension payment day changes

State pensions are usually paid every four weeks, with a person’s National Insurance number determining when a payment will come through.

However, if a payment date falls on a bank holiday, the money will usually arrive earlier on the first working day before this.

For 2021, bank holidays will fall on the following dates in England and Wales, with there being slight variation in Scotland and Northern Ireland:

  • January 1
  • April 2
  • April 5
  • May 3
  • May 31
  • August 30
  • December 27
  • December 28

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