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Lots of changes are happening on the pensions front and we should all be
taking note. These changes don’t just affect retired people; they
affect everyone throughout the country and in all age groups.
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The first significant change relates to the number of years that you need to have paid National Insurance Contributions (NIC) to qualify for a full Basic State Pension (BSP). If you have 30 qualifying years on your National Insurance record, you will be eligible for the full BSP. Anything short of 30 will qualify you for a proportionate pension, so if you have 18 qualifying years you will get 18/30th of the full BSP.
This contrasts with the situation before 6th April 2010. Women who reached their State Pension Age before then, would have needed 39 qualifying years whilst men needed 44.
A married person’s pension, actually known by officialdom as a Category B pension, used to be paid out on the basis of your spouse’s or civil partner’s qualifying years and you couldn’t claim it until your spouse or partner had claimed theirs. This changed on 6th April 2010 and is now treated independently of your spouse’s or partner’s pension.
Major changes have also been made and are ongoing in relation to the State Second Pension payable to those who were on low earnings or to qualifying carers and certain sick or disabled individuals. From 6th April 2010 this has been extended to foster parents, people awarded child benefit for a child under 12 and people looking after someone with a qualifying disability for more than 20 hours a week. Further changes are anticipated in the period leading up to 2015.
The Government have committed to increasing the Basic State Pension each year in line with average earnings rather than retail prices, but this depends on affordability and may not come into effect before 2015.
Another significant change is the age at which you are going to be able to claim your State Pension. Until 6th April 2010, this has been 60 for women and 65 for men. From 2010 until 2020 the retirement age for women is being increased on a graduated basis to 65 to bring it into line with men. The retirement age for both men and women will then be increased in stages such that the retirement age will be 68 by 2046. Some commentators are suggesting that this may not be enough and that the retirement age should be increased to 70 by 2046 at the latest. Much depends on the economic performance of the country and the level at which the aging population increases.
These are complex issues and a great many changes are in the pipeline as we have indicated above. It’s obviously not possible in this short article to cover all of the changes and if you would like further details you can refer to the Pension Advisory Service. There website can be found at www.pensionadvisoryservice.org.uk and specific information regarding future pension reforms is available by clicking this link..