We simplify all those essential financial decisions
IN THE NEWS April 2016The new State PensionMassive changes to the state pension have come into operation. Anyone reaching State Pension Age (SPA) after 5 April 2016 will receive the 'new state pension'.The full amount is £155.65 per week (2016/17) and up until 2020 is guaranteed to increase by the highest of price inflation, earnings growth or 2.5% - known as the ‘triple lock’.However, not everyone will get the full new state pension as it depends on whether full rate National Insurance (NI) contributions have been paid for 35 years.Ten useful ‘need to knows’ about the new State Pension1.Check your new State Pension Age You cannot receive your new state pension before state pension age. To check your state pension retirement age visit the GOV.UK website. By November 2018 SPA equalises at age 65 for men and women. By October 2020 SPA increases to age 662.Your new state pension will not arrive automatically You will be sent a letter 4 months before your SPA explaining how to claim. If you have not heard anything with 3 months from SPA contact 0800 731 7898 or go online 3.Check your National Insurance (NI) contributions You will need 10 qualifying years to get any new state pension & 35 years paying the full rate to get the full new state pension. 4.What will you be entitled to? You can ask for a new state pension statement. People aged 50 or over can request a new state pension statement. Ring 0345 3000 168 or go online to the GOV.UK website5.Missed some NI years? If you have gaps in your NI contributions record, you should think about paying voluntary contributions to achieve the minimum of 10 qualifying years or to maximise the new state pension. This has to be done before SPA. (NI as a parent carer, for unemployment and sickness count towards the new state pension.)6.Were you ever Contracted Out? You may have been contracted out of the earnings-related part of the previous state pension system if you were in a workplace pension or saved into a personal pension, and paid lower NI contributions. This means you will not get the full new state pension, but your private pension will be increased. Most earnings-related pension schemes, including public sector and local authority schemes, were contracted out7.Inheriting the SPA is a ‘no-go’ An individual cannot inherit their spouse's or civil partner's new state pension. In some circumstances they may be able to inherit an extra state pension if widowed.8.Marital status If you are married & get divorced you will still keep the new state pension but may lose or gain an extra state pension.9.Thought about deferring? The new state pension can be increased if payment is deferred by at least 9 weeks. The state pension increases by 1% for every nine weeks deferred. That's 5.8% for a full year.10.Self Employed? The self-employed will also be entitled to the new state pension based on Class 2 NI contribution records.As always, if any of the above prompts any questions please do not hesitate to contact us.