Govt brings forward new state pension and LTC cap

The Government is to bring forward its plans for a £144 a week flat-tier pension and a £72,000 cap on long-term care costs by a year.

George Osborne 480

Chancellor George Osborne told the BBC’s Andrew Marr show yesterday that both measures will now be introduced in 2016. The announcements come ahead of the Budget on Wednesday.

The current full state pension is £107.45 a week but can be topped up to £147.70 with the means-tested pension credit and a state second pension which is based on National Insurance contributions.Those who qualify for the state pension before April 2016 will continue to receive their current entitlement.

The Government is also bringing forward the cap on social care costs, which was originally planned to be set at £75,000 and introduced in 2017, but will now be set at £72,000 and start a year earlier.

Last month the Government confirmed the reform of long-term care would be partly funded by increased employer National Insurance contributions as a result of the abolition of contracting-out.

The care costs cap will also be partly funded by extending the freeze on the inheritance tax threshold at £325,000 for individuals and £650,000 for couples for three years from 2015.

Osborne told the BBC the flat-tier pension would be a “huge boost for people who want to save for their retirement”.

He said: “That is another example of how this Government is helping people who want to save, people who want to leave something to their children like their home, people who want to get on in life, people who do the right thing.

“Those two decisions are going to be enormously helpful.”