Update on the State Pension

Nov 27th 2014 – State Pension is changing from 6 April 2016 for people who reach State Pension age on or after that date. This affects you if you are a man born on or after 6 April 1951 or a woman born on or after 6 April 1953. You can find out what your State Pension age is by using the calculator on the GOV.UK website at www.gov.uk

Who isn’t affected?

If you reach State Pension age before 6 April 2016, you are not affected by these changes even if you have put off claiming your State Pension. You will still be able to claim a State Pension under the old rules, or continue to get the State Pension that you are already getting now.

What are the changes?

When the new State Pension is introduced, it will replace the existing basic and additional State Pension. It will also end ‘contracting out’. Contracting out is where you pay a lower rate of National Insurance contributions because you are contributing to a certain kind of workplace pension scheme, such as a final salary scheme. If this applies to you, you will start paying the standard rate of National Insurance from April 2016.

The new State Pension will still be based on your National Insurance contribution record. What you get depends on how many ‘qualifying years’ of National Insurance contributions you have. Each tax year (6 April to 5 April) that you pay or are credited with National Insurance contributions counts as a qualifying year, provided you earn or are credited with earnings of at least a minimum amount. This amount changes every year.

If you have paid or been credited with National Insurance contributions before 6 April 2016, these will be taken into account when your new State Pension is calculated. The amount of pension you get for those contributions will not be less under the new State Pension than you would have got under the old State Pension, provided you have at least ten qualifying years. These can be from before or after 6 April 2016 and they don’t have to be ten years in a row.

Future pensioners who have no National Insurance contributions before 6 April 2016 will need 35 qualifying years of contributions to get a full state pension. If they have less than 35 qualifying years, they will still be able to get some State Pension, provided they have at least ten qualifying years.

You will not usually be able to claim a State Pension based on your husband’s, wife’s or civil partner’s contribution record, although there will be some limited exceptions to this rule.

How much will the new State Pension be?

The full amount of the new State Pension will be at least £148.40 per week, but it is likely to be higher than this when you can first claim it in 2016. It will be set above the basic level of means-tested support, which means that fewer people will need to claim Pension Credit as a top-up.

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