Latest news with #pensioners
Yahoo
4 hours ago
- Business
- Yahoo
Centrelink issues warning to retirees over payment freeze threat: ‘Fake'
Services Australia has warned Australian age pensioners not to fall for misinformation they might see online. Scammers have been trying to trick people into thinking they need to update their personal and financial documents, or risk their Centrelink payments being cut off. A number of online articles and social media accounts have claimed age pension recipients must submit updated personal, identity and financial documentation by a certain date. They claim failure to do so will result in 'suspension or cancellation' of payments. Services Australia confirmed to Yahoo Finance this information was fake and pensioners do not have to submit updated documentation. RELATED $1,831 Centrelink payment change coming within weeks Coles and Woolworths checkout move that there's no coming back from Aussie couple making $1,200 a day from job anyone can do 'There are fake reports about changes to identity and document requirements,' Services Australia has warned. 'Some unofficial websites say your payment might stop unless you re-confirm your identity or provide documents. This is not true.' Services Australia said these were 'clickbait' websites that were designed to get a lot of traffic through flashy headlines. They may claim there are new document requirements for Centrelink pensioners, new eligibility and verification processes for age pensioners. They may also claim your payments will be cancelled, suspended or halted if you don't meet new requirements or guidelines, or you could get a fine or debt if you don't take action. These are not true. Aussies lost $119 million to scams in the first four months of 2025, Scamwatch data found, despite the overall number of scam reports dropping by nearly a quarter to 72,230. Phishing scams accounted for $13.7 million in losses, nearly tripling compared to $4.6 million in early 2024. The Australian Taxation Office (ATO) has issued a similar warning after noticing clickbait websites claiming there would be changes to superannuation preservation and withdrawal rules from June 1. ATO deputy commissioner Emma Rosenzweig said it was 'classic fake news' and urged people to consider the source of information they see and to go to trusted sources like the ATO website, your super fund, tax agent or financial adviser. 'Beware of websites that might be trying to harvest your personal information such as your TFN, identity details or myGov login details,' she said. 'Think twice before acting on information heard from third-party sources, including non-official websites or on social media.' Services Australia has encouraged people to only trust information online about its payments and services from its official website, myGov or its official social media accounts. 'If a website URL doesn't end in . then it isn't an official government website,' Services Australia said. Services Australia also has information about scams targeting Australians on its website, which is updated regularly.
The Sun
21 hours ago
- Business
- The Sun
How to legally avoid paying tax on your pension as millions hit with shock bills
MILLIONS of retirees have been hit with shock tax bills after their state pension payments increased. Around 904,000 people on the state pension are now paying income tax at 40%, according to data obtained from HM Revenue and Customs in a freedom of information request. Meanwhile, 124,000 retirees are now paying the tax at an eye-watering 45%. The new state pension rose to £11,973 a year in April, putting it within touching distance of the £12,570 income tax threshold. But some pensioners receive more than this amount each year because they delayed the date at which they started to claim the payments. Pensioners who get income from a private pension could also find themselves pushed over this threshold. Income tax thresholds are frozen until April 2028, which means that more people could find themselves dragged into higher tax bands through a concept called fiscal drag. The higher rate tax band is frozen at £50,270, which means any earnings over this amount are taxed at 40%. Meanwhile, the additional rate tax band is fixed at £125,140, beyond which any earnings are taxed at 45%. But there are things you can do to stop a surprise tax bill landing on your doorstep. Here we explain how you can avoid the tax trap. Time your tax free withdrawals You can withdraw up to 25% of your pension pot tax free when you first retire. How to track down lost pensions worth £1,000s However, you need to pay tax on any money you withdraw beyond this. Any money you withdraw is added to the other income you receive, which could push you into a higher tax bracket. One way to avoid this is to spread out your withdrawals over several years, suggests Andrew Oxlade, investment director at Fidelity International. He said: 'If you do take a portion of the 25% tax-free sum every year, that income, along with income from Isas and your state pension, could be enough to keep taxable withdrawals from your pension below the higher-rate threshold.' How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension. He adds that this could be a particularly good idea for people who do not have a particular use in mind for their tax-free sum, such as paying off their mortgage. Andrew recommends that you add up your income from other sources and take the exact amount that will keep your total income below the tax threshold. Avoid emergency tax Once you have withdrawn the tax-free portion of your pension pot you will need to pay tax on any money you take out. When this happens, many savers are put on an emergency tax code. This happens because HMRC does not have an up to date tax code for you, so as a default it charges a higher estimated rate. You may then receive an unexpected tax bill and it can take months to get the money back. One way to avoid this is to take just £1 from your pension pot, which will trigger a tax code from HMRC. What are the different types of pensions? WE round-up the main types of pension and how they differ: Personal pension or self-invested personal pension (SIPP) - This is probably the most flexible type of pension as you can choose your own provider and how much you invest. Workplace pension - The Government has made it compulsory for employers to automatically enrol you in your workplace pension unless you opt out. These so-called defined contribution (DC) pensions are usually chosen by your employer and you won't be able to change it. Minimum contributions are 8%, with employees paying 5% (1% in tax relief) and employers contributing 3%. Final salary pension - This is also a workplace pension but here, what you get in retirement is decided based on your salary, and you'll be paid a set amount each year upon retiring. It's often referred to as a gold-plated pension or a defined benefit (DB) pension. But they're not typically offered by employers anymore. New state pension - This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £203.85 a week and you'll need 35 years of National Insurance contributions to get this. You also need at least ten years' worth to qualify for anything at all. Basic state pension - If you reach the state pension age on or before April 2016, you'll get the basic state pension. The full amount is £156.20 per week and you'll need 30 years of National Insurance contributions to get this. If you have the basic state pension you may also get a top-up from what's known as the additional or second state pension. Those who have built up National Insurance contributions under both the basic and new state pensions will get a combination of both schemes. Once you have the code you can withdraw money from your pot and will be charged at the correct rate. Check your pension provider's rules to make sure it will allow you to withdraw such a small sum of money. Use your Isa Isas are a great way to top up your income without paying any tax. This is because all money you withdraw from an Isa is tax-free, so it does not count towards your taxable income. To make use of them just make sure you withdraw less than £50,271 from your private pension. You can then top up your income with money from an Isa. Or if you do not want to pay any tax then simply claim your state pension and withdraw any extra money you need from your Isa. Pay into your pot If you are still working when you start to receive the state pension then you will be able to benefit from a tax loophole. This is because you can still pay into your private pension even if you are above the state pension age, which is currently 66. Robert Cochran, retirement expert at Scottish Widows, explains: 'This can be especially beneficial if your pension income pushes you into a higher tax bracket. 'Contributions may reduce your taxable income and bring you back into a lower band.' The maximum amount that you can pay into your pension once you are above the state pension age is £10,000. This can have a significant impact on the tax you need to pay. For example, if you earned £10,000 from your job and received the full new state pension then your total income would be £21,973 a year. In total, you would pay £1,878.80 in income tax. But if you paid the money from your job into your private pension then you would not pay any tax. Make use of marriage allowance You may also be able to save on your tax bill if you are married or in a civil partnership. Depending on how much you earn, you may be able to transfer some of your personal allowance to your partner. This tax perk is called marriage tax allowance. You can transfer up to £1,260 of your personal allowance to your husband, wife or civil partner. Doing so reduces your tax bill by up to £252 a year. To benefit you need to be earning less than your personal allowance, which is £12,570. Meanwhile, your partner must earn less than £50,270. website. .
Telegraph
3 days ago
- Business
- Telegraph
Is it worth deferring my state pension?
A little-known secret about your state pension is that delaying when you start taking your payments could mean getting higher amount when you do decide to claim. If you live a long time, it could net you thousands of pounds. But it doesn't work for everyone, and there are some catches to navigate – from gambling on your own life expectancy to potential tax implications. Here, Telegraph Money sets out who could benefit from state pension deferrals, how it affects you and the best ways to avoid some significant drawbacks. What is deferring your state pension? Am I eligible and how does it work? How much would I get? Is deferring still worth it? State pension deferral FAQs What is deferring your state pension? Deferring your state pension is when you decide to wait beyond your state pension age to claim it. People currently reach the state pension age on their 66th birthday. For every nine weeks you wait, you'll get an extra 1pc on top of your original payment when you do come to claim it. Benefits of deferring your state pension There are some major benefits to deferring: Higher payments. The 1pc for every nine weeks stacks up to 5.8pc extra a year, every year, and that's on top of your existing payments. That means you will have more money coming in, and it's guaranteed for life. Your payments will increase each year. Under the triple lock, this extra amount you're receiving will also increase each year by at least 2.5pc. Due to higher inflation, it actually increased by 8.5pc last year and will rise 4.1pc from April 2025. Potential tax savings. You might pay less in tax if your income drops before you claim your state pension. For instance, if you're earning over £50,270 a year, you'd pay 40pc tax on your state pension. If you waited until your income was lower, such as by stopping work, you'd pay less tax. Drawbacks of deferring your state pension There are some major potential pitfalls to deferring and you'll need to consider these: Getting less money overall. The state pension changes each year, but it's generally accepted that it takes between 19 and 20 years from state pension age to break even if you defer, regardless of how many years you defer for. If you die before then, you could end up receiving less money than if you'd started claiming payments as soon as you reached state pension age. A lower income before you claim. You will have less money during the time you defer and if you claim before the end of a nine week period, you won't qualify for that specific 1pc increase. Figures from the Office for National Statistics (ONS) imply that deferring is something of a gamble. Its online calculator suggests that the average 65-year-old men could can expect to live further 20 years, to 85, and 65-year-old women a further 22 years, to 87. This is projected to rise to 21.9 years for men in this age bracket, and to 24.1 years for women by 2045. What is more predictable is how this could negatively affect your tax bill, which we also discuss below. However, it's important to remember that you're not committed to deferring your state pension. If you change your mind, you can just claim it. Am I eligible and how does it work? Anyone can defer their state pension: You don't need to do anything, as your state pension won't start until you actually claim it. This can be done online, over the phone or by post, but you should get a letter explaining all this shortly before you reach state pension age. If you haven't reached it yet, our state pension age calculator can help you find out when this will be. There's no maximum amount of time you can defer for, and you'll keep building up money for every nine weeks you wait. However, it is crucial to also bear in mind that if you or your partner are claiming certain benefits, such as pension credit or Universal Credit, you will not build up extra money by deferring during that time. If you're planning on continuing to claim those, it's unlikely that deferral will be the right option for you. How much would I get? Currently, you would get an extra £2.30 a week, or £120 a year, for every nine weeks you defer. This is because the full state pension for people who reach retirement age after April 2016 is £230.25 per week, or around £11,973 per year for 2025-26. If you deferred for a full year, the 5.8pc increase would add an extra £694 to what you'd receive annually. Alternatively, you can look at it as giving you around £13.35 a week extra. How long can I defer my pension for? You can defer your state pension payments for as long as you like. As state pension payments won't begin until you make a claim, the length of time you defer for is entirely in your hands. The key is working out when the best time to claim is – this will depend on your other income, whether you're keen to minimise tax, and whether you're concerned about potentially missing out on any of the benefit you're entitled to. Navigating higher tax brackets Income from the state pension forms part of your overall taxable earnings, so there are some considerations and calculations to make. It might be worth deferring to save yourself tax. For example, if you reach state pension age, carry on working and your income is over £50,270, you will lose 40pc of your state pension in tax if you claim it immediately. However, if you defer until you stop working, you'll pay less tax if your total income then drops into the lower tax bracket of 20pc. If your only income was your state pension, you could even pay no tax at all. Natalie Kempster, of financial planner Argentis Wealth Management, said: 'Someone earning £150,000 per year would effectively pay 45pc tax on their state pension, meaning that they would net just £6,326. Defer your pension until the following year, when you are retired and a basic-rate taxpayer, then the numbers start to look a whole lot more favourable.' However, Dean Butler, Standard Life's retail managing director, said you should also consider whether taking a higher income later (through deferring) might actually push you into the next tax band, as opposed to taking a lower income from an earlier date. This brings its own issues. It might not be worth deferring if it means you're then taxed at 40pc or 45pc on what you have gained, especially if it's that gain alone that pushes you into the next tax bracket. Is deferring still worth it? Some people think this depends on which state pension they receive. Under the 'old' pre-2016 state pension system, many people deferred because there was a significant uplift to be had, and there was the option to take the deferred payments as a lump sum. Claire Trott, of wealth manager St James's Place, said that compared to the old state pension, the extra amount you get from deferring the new state pension had nearly halved – the uplift for deferring dropped from 10.4pc to 5.8pc. Andrew Tully, of Nucleus Financial, said an alternative to deferring could be to take your payments straight away and use them to invest in an Isa. He explained: 'That means you have access to that at any point, and it may grow over time.' Overall, whether it's worth deferring your state pension is dependent on a number of factors, including your income, where you retire, your cost of living, tax implications and how long you'll actually live. State pension deferral FAQs Can I defer if I've already started getting my state pension? Yes, but only once. You can keep the deferral going for as long you like, but once you restart your pension, you cannot pause it again. You'll need to start the deferral yourself by contacting the Pension Service. Can I defer if I'm still working? Yes. Whether you're working or not has no bearing on deferring, or claiming, your state pension. As long as you've reached your state pension age, the decision is up to you. However, as mentioned before, there may be a tax advantage to deferring if you still have a regular income from work. What if I'm on the old state pension? If you're eligible for the old state pension, you are probably already receiving it. As above, you can still decide to defer it if you haven't already done so in the past. You will get 1pc for every five weeks you defer, which works out as 10.4pc for every 52 weeks. You can take the amount you build up as a lump sum or opt for extra regular payments. If you're on the new state pension, you don't have the lump sum option. What happens if I retire abroad? You can still defer. Each year, the state pension increases by the highest of inflation, average wage increases or 2.5pc. This is known as the triple lock and it applies to the extra amount you get by deferring too. For this to apply however, you'll need to live in the UK, the European Economic Area (including Switzerland) or a country with which the UK has a social security agreement (except Canada or New Zealand). If you live in a country that doesn't fit the criteria, you'll still receive the extra payments you have built up. However, they will be frozen at the level they were at when you either reached state pension age or moved abroad, whichever is later. What happens when I die? This depends on which state pension you receive. If you reached state pension age before April 6 2016, you're on the old state pension. This means your husband, wife or civil partner can inherit the extra payments you've built up, subject to certain conditions. If you get the new state pension, i.e. you reached state pension age on or after this date, they can't. Our guide to what happens to your pension when you die can explain more.
Telegraph
3 days ago
- General
- Telegraph
Pensioners sent angry letter for flying Union Flag in ‘insulting' way
A pair of pensioners who flew their Union Flag upside down have been branded 'insulting' in an anonymous letter posted through their door. Betty and Maurice Curtis, both aged 96, said they have flown the flag on a 15ft pole in the back garden of their home in Weymouth, Dorset, for years without any trouble. But they were left shocked when someone slipped the abusive note through their letterbox. The type letter read: 'To whom it should concern. Is it in ignorance or arrogance that you persist in flying the 'Union Jack' upside down? 'To do so, other than in genuine need to send an 'S-O-S', is an insult! 'For your education, please refer to the illustration below, which shows the correct way to display the flag of the union.' There is then an image of a Union Flag with the message: 'Prevalent part of white uppermost diagonal should be atop the red diagonal.' The couple, who have been married for 75 years, said it was a 'genuine mistake' and that they 'didn't know'. The couple added that they are big fans of the Royal family and have their anniversary card from King Charles proudly displayed on their lounge table. They have no idea who the author of the 'horrible' letter is, but have ruled out all the neighbours in their cul-de-sac who they know well. 'A genuine mistake' Mrs Curtis said it could have been an ex-services person who saw the flag while riding on a bus or train. She said: 'I know the person could have served in the services, but there is no need for that. 'They could have just knocked on the door, and we would have changed it around straight away. Why can't people just be nice? 'It's a real job for Maurice to get up and change the flags sometimes, especially when it's windy. 'We don't know who it could be. Our neighbours are all lovely so it may even have been someone passing on the main street or bus, but to take the time and trouble to come up the drive is horrible. 'It was a genuine mistake. We didn't know and we didn't persist. We all make mistakes; haven't they ever done so?' The couple, who met when Mrs Curtis was evacuated from London to Weymouth during the Second World War, frequently hang flags for various occasions such as national holidays and birthdays, and have done so for a number of years.
BBC News
3 days ago
- Business
- BBC News
Millionaires shouldn't get winter fuel payments, minister says
Millionaires should not be getting winter fuel payments, a senior minister has said, as the government considers how to ease cuts to the allowance for Jones, chief secretary to the Treasury, said the payments would be "targeted to those that need it the most".It comes after Prime Minister Sir Keir Starmer U-turned on the withdrawal of the allowance from millions of pensioners, after a backlash over the Keir said "more pensioners" would be able to claim the payments again, under changes to be made at the Budget this autumn. But the prime minister did not specify how many pensioners would be entitled to claim the payments, when the change would take effect, or how much it would cost the leader Kemi Badenoch has also said she does not believe "millionaire" pensioners should be able to claim the winter fuel Reform UK, the Liberal Democrats and the Green Party have called for the winter fuel allowance to be restored in than 10 million pensioners lost out on payments worth up to £300 last year after the Labour government restricted eligibility to those who qualify for pension credit and other income-related asked on Sky News if ministers should be clearer on how they intend to change winter fuel payments, Jones said "it was right that we set out the detail and pay for those things in an orderly way".He added: "We're sticking to the principle that millionaires shouldn't be getting subsidy for their energy bills from the government, so winter fuel payments will still be targeted to those that need it the most".He did not provide further details of who would qualify as a millionaire, adding that the eligibility threshold would be reviewed in the "coming months". The winter fuel payment is a lump sum of £200 a year for households with a pensioner under 80, or £300 for households with a pensioner over was previously paid in November or December to all pensioners who claimed it, regardless of their income or 10.3 million pensioners lost out last year after the Labour government made changes to save an estimated £1.4bn, with ministers arguing immediate savings were needed as the Conservatives had left a "hole" in the public pressure to change course has grown in recent weeks, with some Labour MPs and councillors blaming the policy for the party's losses at last month's local elections in parts of England. 'Hassle' The Institute for Fiscal Studies (IFS), a think tank, has suggested a number of ways the government could expand who is able to claim the income threshold for pension credit, the main benefit to qualify to continue to receive winter fuel payments, is currently £11,800 a year for individuals and £18,023 for pensioner IFS said a new means-test would create "hassle" for pensioners and "would no doubt result in many not claiming".It would also "imply a lot of administrative cost for what is a fairly small benefit", the IFS Foundation, a think tank, said there were "huge doubts" over how a new means-test would work, and estimated that expanding eligibility for pension credit by 10% could cost £2.5bn, more than the original winter fuel cut was meant to save.
