Will the pension changes affect you?
Next month will see the first in a series of changes to the state pension. Are you aware of the changes and how they will affect you?
Thursday 4th March 2010
By Paul Davies
Know Your Money Editor
A host of changes are set to be made to the state pension in the not too distant future and with just over a month until the first come into action on April 6th, it could be vital to be aware of them right now.
Big changes are planned for the state pension system in order to account for the fact that people are living longer and healthier lives, meaning there are comparatively fewer people of working age to support the retired population.
All this means that by 2046 the state retirement age will have risen to 68 - it is currently 65 for men and 60 for women.
Men and women to be on equal terms
Most people will already know that the retirement ages are changing to become equal for men and women. This will be a gradual process, but over the next ten years the state age for retirement will increase to 65. By 2046 this will increase to 68 for both sexes.
In the short term this means that only women who turn 60 between now and April 5th will be able to retire on their 60th birthday. Women born after this date will have to wait a little. So women who turn 60 on April 6th will need to wait until May 6th until they can retire. By 2020 this will mean that the retirement age for women is 65.
Those who are unsure about when they will be eligible for the basic state pension of £95.25 per week can find out more by taking a look at the Direct Gov pension calculator here.
Are there changes to when can you draw your pension?
People do not need to wait until their existing retirement age to be able to draw their pension if they are part of a company scheme or have a personal pension. However, from April the age at which people will be able to access their pension will increase from 50 to 55.
Those who are currently over 50 but under 55 may want to think fast about the next few years as if they do not opt to draw out their pension in the coming weeks, then the choice will be gone until they reach 55.
What's the good news?
It isn't all bad news though, especially for people who have to take a few years out of work, perhaps to raise a family.
From April 6th, you will only need to have made National Insurance payments for 30 years in order to qualify for the full basic state pension. At present, women need to work for 39 years and men for 44 in order to receive the full benefit, which may make a significant difference to a number of people.
Those of you who reach state pension age before April 6th and are concerned about missing out - or worried about acquiring the necessary 30 years during your working life - you can buy back missed years.
At the moment this costs £626.60 per year but this can vary from time-to-time.
A big change ahead
From April 2012, every employee will be automatically enrolled into a company pension with one per cent of their salary being put into it - rising to three per cent by 2017 - and employers will be forced to contribute to it too.
Know Your Money Editor
A host of changes are set to be made to the state pension in the not too distant future and with just over a month until the first come into action on April 6th, it could be vital to be aware of them right now.
Big changes are planned for the state pension system in order to account for the fact that people are living longer and healthier lives, meaning there are comparatively fewer people of working age to support the retired population.
All this means that by 2046 the state retirement age will have risen to 68 - it is currently 65 for men and 60 for women.
Men and women to be on equal terms
Most people will already know that the retirement ages are changing to become equal for men and women. This will be a gradual process, but over the next ten years the state age for retirement will increase to 65. By 2046 this will increase to 68 for both sexes.
In the short term this means that only women who turn 60 between now and April 5th will be able to retire on their 60th birthday. Women born after this date will have to wait a little. So women who turn 60 on April 6th will need to wait until May 6th until they can retire. By 2020 this will mean that the retirement age for women is 65.
Those who are unsure about when they will be eligible for the basic state pension of £95.25 per week can find out more by taking a look at the Direct Gov pension calculator here.
Are there changes to when can you draw your pension?
People do not need to wait until their existing retirement age to be able to draw their pension if they are part of a company scheme or have a personal pension. However, from April the age at which people will be able to access their pension will increase from 50 to 55.
Those who are currently over 50 but under 55 may want to think fast about the next few years as if they do not opt to draw out their pension in the coming weeks, then the choice will be gone until they reach 55.
What's the good news?
It isn't all bad news though, especially for people who have to take a few years out of work, perhaps to raise a family.
From April 6th, you will only need to have made National Insurance payments for 30 years in order to qualify for the full basic state pension. At present, women need to work for 39 years and men for 44 in order to receive the full benefit, which may make a significant difference to a number of people.
Those of you who reach state pension age before April 6th and are concerned about missing out - or worried about acquiring the necessary 30 years during your working life - you can buy back missed years.
At the moment this costs £626.60 per year but this can vary from time-to-time.
A big change ahead
From April 2012, every employee will be automatically enrolled into a company pension with one per cent of their salary being put into it - rising to three per cent by 2017 - and employers will be forced to contribute to it too.
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(2) Comments so far | Post a comment
Marian Cox wrote:
I have nearly always worked part time and paid a married woman stamp in the understanding that i would be able to claim a pension on my husbands contributions, I am now widowed and wondered if this was still the case?
Friday, Mar 5 2010
Sandra Staephen wrote:
I was encouraged to work part time and bring up my family,so i paid the small stamp with the result i now have a meagre pension of £50 per week.what is your views on this situation.
Friday, Mar 5 2010