UK Pensions Update - March 2021

12 March 2021

On Wednesday 3rd March the Chancellor, Rishi Sunak, announced the 2021 Budget. The main areas affecting pensions are highlighted below.

Lifetime Allowance Freeze

The current Lifetime Allowance (LTA) of £1,073,100 will be frozen until April 2026.

If you have already retired from the M&S Pension Scheme, you can find the amount of LTA that you have used (as a percentage) on your annual pension increase letter or the confirmation letter we sent you when you retired. 

If you are retiring from the M&S Pension Scheme soon, you will need to confirm the amount of LTA that has been used up by any other pension income that you may have.

Find out more about the LTA here

Personal Allowance Freeze

The Personal Allowance will rise to £12,570 from April 2021 and will remain at this level until April 2026. The Personal Allowance is the amount of income you do not have to pay tax on.

The income tax higher rate threshold will also rise to £50,270 from April 2021 and will remain at this level until April 2026.

Also, on Wednesday 3rd March, the Department for Work and Pensions (DWP) made an announcement regarding underpaid state pensions.

Underpaid State Pensions

The DWP has identified an error backdating to 1992 relating to married women, widows, divorcees and the over 80s (whether married or not) who reached state pension age before April 2016 and may have been underpaid their state pension.

While some women who have been underpaid will get an automatic payment, not all will. This MoneySavingExpert guide explains who may be affected.