On 14 January 2013, the government published a White Paper setting out its plans to introduce a new single-tier state pension. A draft Pensions Bill has now been published setting out the full proposals.
The government plans to introduce this new flat rate state pension from 2017 at the earliest and it will be set at around £144 per week. The state second pension will end, at that time. The changes will not apply to people who are in receipt of a state pension when the new arrangements are introduced.
The Work and Pensions Select Committee will undertake a detailed examination of these clauses, and make recommendations for any necessary changes, before the finalised Bill is introduced. As always there will be winners and losers.
Legislation is already on the statute books effectively postponing “retirement day” for men and women already in their fifties. Younger age groups also affected at least will have time to adjust. Plans to raise the pension age for women from 60 to 65 were originally put in place in 1995, with the ages being equalised by 2020. But in 2010 the Government fast forwarded the timescales meaning many women already in their fifties saw their retirement date pushed back yet again, with some facing a further eighteen months delay.
State Pension Age for both men and women will increase to age 66 by 2020. Further legislation increases the State Pension Age to 68 by 2046 although the Government has said it wants this increase to happen faster.
The new Pensions Bill will also impact on National Insurance contributions (NICs) requirement for all. Currently people need 30 years of NICs to qualify for the full state pension. This will rise to 35 years under the new rules.
Whatever the end result men and women, particularly those in their forties and fifties need to take a close look at where this will leave them alongside any private provision and ensure they are making the best of it.
A good start would be to check out your specific pension payment date – you can do this by logging your date of birth into the following government website link: https://www.gov.uk/state-pension-statement. Also you should order your specific state pension forecast from the same web site.
by Tom Calvert