Pension Changes – How the Government Changes to Pension Rules Will Affect You
On 6th April this year, various modifications were introduced by the DWP aimed at helping women, carers and low earners in retirement, but it was not good news for everyone.
One of the most considerable changes is the increased nominal age for drawing a retirement pension. From 6 April, the minimum pension age was increased to age fifty five, affecting more than four million individuals who were born between the sixth April 1955 & fifth April 1960 who unfortunately have to postpone for up to five yrs to get their pension.
The state pension age for women also began to increase from 6th April until it reaches sixty five in two thousand and twenty. By thousand and twenty six , it is set to rise to sixty six for everyone, until it in the end reaches 68 in twenty forty six.
Additional alterations include a reduction in the National Ins (NI) contributions needed to qualify for the full basic state pension, which increased from £95.25 a wk to £97.65 a wk from the sixth April. Men and women will now need to build up just 30 years of contributions, which the state forecasts will provide for an extra forty thousand adult females who get to pension age in the next tax year to qualify for the full state pension.
The state second pension will also be impacted by the changes and now payments within the upper earnings threshold have been reduced from 20 to 10 percent. At some point, this will be altered to a flat rate payment rather than an earnings-related pension, and will proceed to be related to inflation, not earnings.
A different credits system supersedes the Home Responsibilities Protection (HRP) scheme, which is designed to aid parents and carers to qualify for the basic state pension. From the sixth April, qualifying yrs can immediately be made up through weekly credits. These can then be added on to any paid contributions made when at work, with no limit on the credits awarded, as long as the qualifying rules are met.
For those reaching basic state pension age later this change takes place, each complete year of HRP, up to a maximum of 22 years, will be converted into qualifying years for the basic state pension.
Consilium Asset Management provide retirement planningadvice to clients in the South West of England
