The New State Pension and Age
The new legislation brought in by the government from 6th April 2016 introduced a differential of the state pension in England. The pension plan provides a higher rate of up to £155.65 per week to those who are eligible, supporting a more comfortable lifestyle. The new legislation is a confusing array of eligibility criteria on who can gain the State Pension, who has the old pension plan and who is not eligible at all.
The new State Pension age in simpler terms:
- Women born before 6th April 1953 and men before 6th April 1951 are eligible for the old State Pension with a basic rate of £119.30 per week.
- Those born after these dates with a minimum of 35 years National Insurance contributions are eligible for the full amount of the new State Pension and weekly rate of £155.65.
- If you do not have at least 10 years of qualifying contributions, you are not yet eligible for any of the State Pension under the new rules.
- However, if you have between 10 and 35 years of qualifying NI contributions your weekly payment is calculated by multiplying £4.45 by the years of contributions you qualify for. For more information on how this is worked out, click here.
The new State Pension is one to keep on your radar as you will have to claim the benefits; it will not be given to you automatically. You will however receive a letter via post 4 months before you reach the qualifying State Pension age, to help you keep on track. You can claim your State Pension via phone, online or by filling out a form and sending it directly to the pension service.
There are ways you can increase your weekly State Pension income, to make the money go further and possibly last longer. You can defer claiming your state pension after you have reached the eligible age. For every year you decide not to take your pension you receive an extra £4.45 per week on top of the eligible £155.65 per week.
However, some people may be liable to deductions from their starting State Pension weekly income. Those who had a workplace, personal or stakeholder pension before the 6th of April 2012 are liable to deductions at the beginning of their pension as well as those who were contracted out. To find out if you were contracted out click here.
The changes to the State Pension are potentially good news to those who are approaching retirement, however the new legislation can be confusing. Your pension is likely to play an important role in your retirement income so it’s a good idea to understand how it may affect you.
If you have any questions regarding your new State Pension age or your eligibility, please contact us at People and Business, click here.