On 6th April this year, several changes were made by the Dept of work & pensions aimed at assisting adult females, carers and small wage earners in retirement, but it was not great news for everyone.
One of the most significant changes is the increased min. age for drawing a pension. From Sixth April, the nominal pension age was uplifted to age 55, impacting more than four million individuals who were born between the 6th April 1955 & the 5th April 1960 who will unfortunately have to postpone for up to five yrs to draw their retirement pension.
The state pension age for women also began to rise from 6th April until it reaches sixty five in two thousand & twenty. By twenty twenty six, it is set to rise to sixty six for every person, until it ultimately gets to 68 in twenty forty six.
Other alterations include a reduction in the Nationa Insurance (NI) contributions necessary to qualify for the full basic state pension, which increased from £95.25 a wk to £97.65 a week from 6 April. Men & adult females will in the future need to build up just 30 years of contributions, which the state anticipates will now allow for an additional 40,000 women who get to pension age in the next tax yr to qualify for the maximum state pension.
The state second pension will also be affected by the changes & now payments within the upper earnings threshold have been reduced from 20% to ten per cent. At some point, this will be changed to a flat-rate payment rather than an earnings-related pension, & will proceed to be tied to inflation, not pay.
A different credits system supersedes the Home Responsibilities Protection (HRP) scheme, which is designed to serve parents & carers to qualify for the government pension. From the 6 April, relevant years can now be made up through 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 modification 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 West of England
