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The State Pension: What can you expect?

The state pension what to expect
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For years, the UK has had a state pension where providing you have made the appropriate amount of National Insurance contributions, when you reach pension age you would receive a standard amount of money paid to you.

Big State Pension shortfall due to people living longer

Over recent years, the dynamics in the UK have changed; people are living longer and less people are saving for retirement or making the required contributions. There are also inequalities in the system which can affect people who are self employed or have broken work histories.  All of this means that there shortfall in the amount the government will have aside to pay pensions and as a result, the government are introducing a new single tier state pension which they hope will be fairer and simpler and remove the more complex elements of the state pension of old.

Cut off point for current rules

Any pensioners at present or those reaching state pension age before 6th April 2016, will receive their state pension in accordance with the current rules. However, after that date, in order to receive a full basic state pension of £110.15 per week when you reach retirement age, you need to have made National Insurance contributions or credits for 30 years. Less than 30 years and you will receive a smaller amount. To make up the required amount of National Insurance contributions or Credits, you will have needed to make contributions made when you were working and earning over £5,668 per year, be claiming certain benefits for unemployment or sickness, you are a parent or carer claiming certain benefits, your partner was making contributions on your behalf or you were paying voluntary National Insurance e.g through self employment.

Before 2010, the benefits that would count as credits were Child Benefit, if you worked as a registered carer or if you cared for someone sick or disabled. Since April 2010, you will qualify for credits if you care for someone sick or disabled, you get carer’s allowance, you are a registered foster carer or you care for a child under 12. If you aren’t working and don’t qualify for any of the credits listed, then you can make voluntary National Insurance contributions.

Things are slightly different for men and women who were born before April 1945 and April 1950 respectively. For a man to qualify for a full state pension at present, he will have needed to contribute for 44 years (11 years for any state pension at all) Women born before April 1950 will have needed to contribute for 39 years for a full state pension or 10 years for any state pension. This has indeed created some shockwaves throughout those within that age bracket, but the government feel this is the fairest way of simplifying the pension scheme before the single tier pension is fully introduced in April 2016.

State pension rule changesState Pension age has changed

Other changes to the state pension include the definition of ‘state pension age’. Back in 1995, it was agreed that the state pension age for women would increase from 60 to 65 starting from April 2010, and the Pensions Act in 2011 sped things up so that by 2018 the process would be complete. For men, then pension age will increase to 66 from October 2020. The government are wanting to further increase the state pension age to 67 between 2024 and 2026 and then to 68 by 2046, but at present, that legislation hasn’t been passed. Your pension age will obviously depend on when you were born and when planned changes are due to come into practice.

When you reach state pension age, you have to apply to receive your pension. You should receive a letter around 4 months beforehand that will explain what you need to do. You should then be able to register to claim your pension online, by sending your claim form to your local pensions centre or by calling the pension claim line on 0800 731 7898 textphone 0800 731 7339. You can continue working and claim your pension at the same time or you don’t have to claim your pension when you reach retirement age at all. You can defer it, meaning your pension amount may increase or you could claim a lump sum.

Your pensions office, Citizens Advice Bureau or Department for Work and Pensions (DWP) will be able to advise on any query around pensions or pension age. Should your circumstances change in any way for example, you marry, form a civil partnership, go into a care home, are widowed or divorced  or move abroad when you are receiving your pension, you should contact the pensions office as soon as possible to ensure your pension amount is correct.

 

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About Rebecca Robinson

About Rebecca Robinson

After spending the last 8 years juggling life as a mum of two, wife and working full time as a Project Manager for a global telecommunications company, Rebecca Robinson made the decision to follow her love of writing and took the plunge; turning her passion into a full time career. Since becoming a full time writer, Rebecca has worked with various media and copy-writing companies and with the ability to make any topic relevant and interesting to the reader, now contributes to The Working Parent on articles ranging from credit cards to teenage relationships. Ever the optimist, Rebecca's dreams for the future include a house in the country filled with children, dogs and horses in the field!

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