The smart choice for self-employed professionals

News

• All News
•  
• General News
• Taxes & Legislation
• Operational Updates

Ask A Question

Title*

Forename*

Surname*

Your Question*

Email Address*

 

State pension changes

15.01.13

A radical change to the pension system was unveiled yesterday, with the current two-tier system set to be abolished. The proposed plans are due to come in to action in 2017, but analysts have warned it could leave many employees worse off.

The changes are said to benefit women, the self-employed and those on a low salary. This will be the first time that the self-employed will be able to take full advantage of the state pension.

However, according to the government's 'White Paper', these changes could make over half of the people claiming their pension after 2060 worse off.

If you are due to retire before the new system is introduced, you will be ineligible for the new single-tier system. The current state pension starts at £107.45 per week and goes up to a maximum of £142.70 depending on pension credit and the second state pension.

If you plan on retiring after April 2017, you will be subject to the new flat rate system. You will be required to make National Insurance contributions for 10 years in order to receive £41 per week. To receive the full £144 per week pension (which works out at £7,488 per year), you will need to build up and increased 35 qualifying years of NI contributions (currently 30 years).

One major change applies to families. If you are taking time out of work to raise a family, you will still build up your state pension-qualifying years.  Any woman who has a damaged pension record as a result of taking time out to raise their children will now have that restored.

The announcement rewards married couples, as both partners will now be able to qualify for the superior full, individual pensions, rather than sharing the current shared couple's rate. Couples currently get £171.85 per week, unless both partners have worked under the proposed changes this would increase to a combined £288 per week.

The state pension age is also set to rise to 66 for both men and women by 2020, and then rise again to 67 by the year 2028. The age will also be reviewed every 5 years from 2017. It is predicted that the current generation of teenagers will need to be over the age of 70 to receive their state pensions.

Despite the flat rate pension not being introduced until 2017, this comes as good news for Consort's contractors. These are some of the biggest changes towards pensions in the UK in decades.

For more details, click here.

<< Back to All News