PLANNING
The state pension
The state pension remains an important source of income for retirees.
Paying up to £115.95 per week (15/16 tax year) for
anyone with a full record of national insurance
contributions, you need to ensure that you have built
up your entitlement over time and make the most of
it when you retire.
You can currently claim the state pension when you
reach 65, but the government plans to progressively
raise this age from next year. The state pension age for
men and women will gradually increase to reach 66 by
October 2020 and then 67 between 2026 and 2028.
Finally, it will increase to 68 between 2044 and 2046
(affecting people currently aged 38 and over).
When you reach state pension age, you have three
choices:
1
Stop working and claim your state pension
2 Continue working and claim your state pension
3
To be entitled to the full basic state pension, 30
qualifying years of national insurance contributions
must be accumulated. If you have been working and
paying national insurance for that time, you are
almost certainly covered. National insurance credits
may have been provided for unemployment, sickness
or as a parent or carer. Equally, you can pay voluntary
national insurance contributions to top up your
qualifying years.
Key points
The state pension provides just enough to live on
The government in the UK is at war with the
welfare state, so expect more pressure on
pensions
You may not even qualify for a full state
pension at retirement
.........
Continue working and put off claiming a state
pension
This latter option has some advantages. If you
continue working after state pension age, you don’t
pay national insurance contributions, meaning you
get to keep more of your income. By deferring the
state pension, you may also receive a higher weekly
amount – for every five weeks deferred, the future
weekly allowance is increased by 1 per cent.
The government is consulting to decrease this
allowance, but no plans have been finalised.
For more information, visit:
www.gov.uk/government/uploads/system/uploads/a
ttachment_data/file/181237/single-tier-pension-factsheet.pdf
The new single tier
state pension
From 6 April 2016, the
government intends to introduce
a new single tier state pension,
for which you will be entitled
to £155.65 per week, as long as
you have met the qualifying
conditions.
Anybody retiring
before this date will fall under
the existing rules and receive
the pension they already qualify for.
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