State pension changes from April 2016

How will it affect you?

 

The new state pension regime starts on 6 April 2016 and a survey carried out by Which? as reported by the BBC indicates that just under half of people surveyed do not know what rate the new pension will be.

A new flat rate or single tier state pension comes into force for everyone who reaches state pension age from Wednesday 6 April 2016. The new maximum rate will be £155.65 per week for those with at least 35 years of qualifying national insurance (NI) contributions. If you have contributed for a shorter period the pension will be proportionately less but if you qualify for a higher pension under the old rules then you will get the higher amount.

Those who have taken a career break, paid reduced married woman contributions or have been contracted out of the state scheme may not have the 35 year contribution record required. You can check your state pension if you are over age 50 by asking for a forecast.

The new state pension regime does not apply to those already receiving a state pension.

The other side of the state pension change is the change to NI contributions. The contracting out rate of NI is not available from 6 April 2016. This will make a significant difference to many employees who will find their NI rate will increase from 10.6% on their weekly earnings between £155 and £770 to 12%, a pay cut of potentially £8.61 per week as they move from contracted out rate to the full rate. 

Anonymous