Do You Know About The Changes To The State Pension?

Were you aware that as from 6 April 2016 there will be changes to the state pension?

If you already claim state pension or will do so before 6 April 2016, you won’t be affected by the changes but those who reach state pension age on or after 6 April 2016 will be assessed under the new rules. Those who will be affected will be women born on or after 6 April 1953 and men born on or after 6 April 1951.

From 6 April 2016, the basic state pension and additional state pension will be replaced by a flat rate pension.  The rate will be announced later in the year although it’s expected to be at least £148.40 a week. In order to qualify for the full, flat rate pension, however, you will need to have paid or been credited with 35 years’ worth of National Insurance contributions rather than the current 30 years of contributions. Any less than the 35 years of contributions and the pension will be paid on a pro-rata basis but you will need to have at least 10 years of contributions to receive anything.

The other big change that will impact non-working spouses is that it will no longer be possible to substitute the National Insurance record of their spouse or civil partner if they do not have sufficient National Insurance contributions in their own name.  Under the new rules, the new state pension will be based on an individual’s personal contribution only.

The new rules also mean that it will no longer be possible to opt for a taxable lump sum if you choose to defer claiming your state pension.  You’ll still be able to defer claiming and benefit from a 5.8% increase in the weekly pension albeit that the rate of the increase is significantly less than the current 10.4%.