With effect from April 2016 the government plans to introduce a single tier state pension of £144 per week in today’s terms. This is a significant increase on the current basic state pension of £110 per week.
However, it’s not all good news.
The new proposals to increase the basic state pension will be coupled with an increase in the age at which you can claim it. We’re all living longer and as a result we’re placing too much burden on the state. As a result, state retirement age is increasing. For a long time, state retirement age for women was 60. It is now gradually increasing so that by 2018 female retirement age will be 65 in line with males.
Retirement age will then increase for both males and females to 66 from 2020 and 67 from 2026.
There is another downside which will affect women significantly.
To receive the full state pension you need to have worked and paid National Insurance or received National Insurance credits for a minimum of 35 years. This is an increase on the current limit of 30 years.
Women are most likely to be affected by this increase since more often it is the female partner who will take time out of the workplace to bring up children.
NI credits are available if you are raising children under the age of 12. See Claim child benefit to protect your state pension for further details. NI credits are also available if you are a carer and in certain other circumstances. However dependant on your specific circumstances you may not have achieved the 35 year limit.
Are you affected?
Check your state pension forecast. To see if you are currently on target for a full state pension.
Currently married women without their own entitlement to a state pension can receive a pension worth 60% of their husband pension based on his NI record. They can also inherit his pension when he dies.
These rules will change following the introduction of the new single tier pension so that a married woman’s pension entitlement will only be based on her individual record. If you are a women without enough qualifying years to be entitled to your own single-tier pension consider making voluntary contributions to increase your pension entitlement .
If you are concerned about how these rules will impact on you please call me on 01932 698150 for a confidential chat.