The New State Pension
The new State Pension took effect from the 6th of April 2016. The old system which was based on your National Insurance record (making up your Basic State Pension) and earnings (making up the Additional State Pension) will now be based just on your National Insurance record.
To qualify for the full new State Pension of £155.65 per week, you will need to have been born after 6th April 1951 for Men or after 6th April 1953 for Women, and to have completed 35 qualifying years on your National Insurance record.
A qualifying year is one in which you have been working and paying National Insurance contributions or receiving National Insurance Credits (for those unemployed, in sickness or as a parent or carer) or have made voluntary National Insurance contributions.
What if I’m already getting a State Pension? The change will not affect you and your current State Pension will continue as is.
Will the State Pension increase? The Government has pledged to maintain the “triple-lock” promise during its current term, whereby payments will increase by the higher of Inflation, Average Earnings or 2.5%.
What if my State Pension entitlement is already higher than the £155.65 on the 6th of April 2016? Then you keep the entitlement to the higher amount. For example if you were entitled to £170.00 per week at April, you will have the foundation amount of £155.65 and a protected amount of £14.35. If the Basic State Pension were to rise to £160.00, including the protected £14.35, your State pension would be £174.35.
If I was previously “contracted-out” of the Additional State Pension (formerly SERPS/S2P), will this impact my entitlement to a full State Pension? Possibly. Your entitlement to the full State Pension may be reduced. That said, you can continue to build up to your full State Pension entitlement until you reach your State Pension Age, so could still achieve a full State Pension (depending on how long you were contracted-out for and how many Qualifying years you accrue before your State Pension Age).
Is the State Pension Age going to go up in the future? More than likely. Recent studies predicting even longer life expectancy mean that those currently in their teens & twenties could be looking at working to at least 70 before receiving their State Pension. The next government review is due in 2022, but at the last review a commitment was made that there would be a 10 year warning period before any further changes.
Links to the relevant government websites are as follows:
The new State Pension: www.gov.uk/new-state-pension
State Pension Forecast: www.gov.uk/check-state-pension