Pension Changes - How the State Alterations to Pension Rules Might Affect You
May 21st, 2010
On 6th April this year, various modifications were made by the Dept for work & pensions targeted at helping adult females, carers and low wage earners in retirement, only it was not good news for everyone.
One of the most considerable modifications is the enhanced min. age for drawing a retirement income. From 6th April, the nominal pension age increased to age fifty five, affecting more than 4 million individuals who were born between Six April nineteen fifty five & fifth April 1960 who will unfortunately have to wait for up to 5 yr to draw their pension income.
The state pension age for women also started to rise from 6th April until it reaches 65 in two thousand & twenty. By thousand and twenty six , it is set to rise to 66 for everyone, until it in the end reaches 68 in twenty forty six.
Other modifications include a reduction in the Nat’l Ins (NI) contributions required to qualify for the full basic state pension, which raised from £95.25 a week to £97.65 a week from 6 April. Men & adult females will in the future need to add up just thirty years of contributions, which the government predicts will provide for an additional 40,000 adult females who get to pension age in the next tax year to provide entitlement for the full state pension.
The state second pension will also be impacted by the modifications & now payments within the upper earnings threshold have been reduced from twenty percent to ten percent. At some point in the future, this will be altered to a flat-rate payment rather than an earnings-related pension, and will proceed to be related to inflation, not wages.
A different credits scheme replaces the Home Responsibilities Protection (HRP) scheme, which is designed to serve parents & carers to qualify for the state pension. From 6 April, qualifying years can now be made up by weekly credits. These can then be added on to any paid contributions made when at work, with no limit on the credits awarded, as long as the qualifying rules are met.
For those reaching basic state pension age later this shift takes effect, each complete year of HRP, up to a maximum of 22 years, will be converted into qualifying years for the basic state pension.
Consilium Asset Management provide retirement planningadvice to clients in the South Gloucestershire area
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