Trustnet Magazine Issue 23 November 2016 | Page 28
IN THE BACK
/ PLATFORMS /
ALTERED STATE
Changes to the state pension will make you better off – so long as
you can work out what they mean, writes John Blowers
T
HE STATE PENSION
HAS CHANGED
RECENTLY from a
relatively
straightforward
proposition to something that is a
little more complex. On the
surface, there is good news.
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The amount you will receive each
week has risen from £119.30 to
£155.65. Annualised, that is
£8,093.80, more than £1,890
extra per year.
So, if you are a woman born after
6 April 1953, or a man born after
6 April 1951, you will get the new
state pension. If you were born
before these dates, you will receive
the old state pension.
Simple. Well hold on. This is
the government we’re talking
about, so it has managed to weave
considerable complexity into the
new rules.
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You have to qualify for the new
state pension and your National
Insurance (NI) record is taken into
account.
To receive the full £155.65, you
will need to have 35 years’ worth
of NI contributions or “credits”
(referred to as qualifying years)
during your working life. These
don’t have to be consecutive years.
If you have less than 35 years of
NI contributions, you will receive
an amount based on the number
of years you have paid or been
credited with NI.
If you have less than 10 years of
contributions, you probably won’t
receive a state pension at all.
Under the old system, if you
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It is estimated
only around
half of the
population will
receive the full
£155.65 state
pension
were employed (rather than
self-employed) you will have
paid Class 1 National Insurance,
which entitled you to the basic
state pension and an additional
state pension. The additional
state pension was based on your
earnings as well as the National
Insurance contributions you had
made or been credited with.
Under the old state pension
rules, workers were able to build
up the additional state pension – a
top-up to the former basic state
pension. Although the new rules
have now scrapped this top-up,
the government has allowed many
workers in their 40s, 50s and early
60s to keep any of the extra cash
already amassed. If you had built
up a substantial entitlement to
an additional state pension, this
may mean that you have already
earned a pension under the old
system that is worth more than
£155.65 a week.
The following links come
recommended if you want to know
more.
• Government website
• Money Advice Service
• Pensions Advisory Service
You may be like me: I’m not
really sure if I have – or will
have made – 35 years of NI
contributions over my working
life during my chequered career:
sometimes employed, sometimes
self-employed and a couple of
short spells of “gardening leave”.
And I do remember contracting
out of SERPS (the State Earnings
Related Pension Scheme – or the
additional state pension) at one
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