You may be wondering what is happening with the new single-tier state pension. There is no doubt that the UK has a bewilderingly complex state pension that is trying to achieve something very simple. As with all government changes, some will win and some will lose…
So what is being proposed? It’s simple – a single payment of £144 a week in today’s money.
If you are already in receipt of your state pension then you’ll continue to receive it under the current rules. People who reach state pension age in 2017 or after will qualify for the new higher state pension.
Currently you need 30 years of National Insurance Contributions (NICs) to qualify for a full state pension. This will rise to 35 years when the new pension is introduced.
Unfortunately for some people who have taken early retirement assuming they’ve made sufficient NICs to qualify for a full state pension may find that this is not now the case.
In a recent article in the Daily Telegraph one reader realised that had she been born six days earlier she would have received her pension at 61. Instead she has to wait another 18 months to collect it. On top of that had she been born six months later she would have received the new state pension, giving her an extra £40 per week!
People can make additional voluntary NICs, currently £698 to buy a qualifying year. Looking ahead to the new state pension this will become good value and you should look at this as an option if you retire in 2017 or later and won’t have 35 years NICs.
If you have already made contributions to State Second Pension you won’t lose this entitlement and will be eligible to receive more than the £144 per week if you are retiring post 2017.
If you want any further information feel free to contact me.
By David Gibson