Retirement matters

Commitment to help pensioners

New rules announced in the Budget will allow small occupational pension scheme benefits to be paid as a lump sum where the value is below £2,000. This allows people to take very small benefits in one occupational scheme as a lump sum under the triviality rules while receiving an income from another, larger, pension pot.

Previously it was not possible to take small pension pots as a lump sum if the value of a person’s pension savings in total exceeded £16,000.

Winter fuel bonus

The Chancellor announced a higher winter fuel payment for older people, but it will be paid only once.

The Treasury said: ‘Building on the government’s substantial commitment to help pensioners, there will be an additional payment for winter 2008/09 of £50 for households with someone aged 60-79 and £100 for households with someone aged 80 or over. This will be paid alongside the Winter Fuel Payment.’

Energy bills

Gas and electricity companies will have to provide £150m of subsidies per year to the poorest households through social tariffs.

By next winter they will have to show they have stopped penalising users of pre-payment meters by making them pay higher rates for energy.

Inheritance tax

As previously announced, the inheritance tax allowance will be increased by more than inflation in each of the next three years.

The allowance for the tax year 2008/09 is £312,000 for individuals or £624,000 for married couples and civil partners.

For 2009/10 it will be £325,000 for individuals or £650,000 for married couples and civil partners.

For 2010/11 it will be £350,000 for individuals or £700,000 for married couples and civil partners.

The value of estates over and above the allowance is taxed at 40 per cent.