We can all strongly agree that the pension changes in Britain are causing a complete muddle. We are living longer but many people are not saving towards their retirement.

Pensions Peterborough

Official job figures showed that nearly one-in-ten “pensioners” were still employed – 615,000 men and 388,000 women. So where does that leave the rest of us?

This post highlights some of the changes to pensions in Britain and what you can expect to happen – Remember: The value of the investment can go down as well as up and you may
not get back as much as you put in.


UK Pensions – What happens now?

Those of you that have made national insurance contributions over your working life will be paid by the state pension. One individual may well earn a pension around £110 weekly. However due to the state pension suggesting that many families had a spouse that did not work, they allow married partners now to claim a pension based on the working partners NI record. This pension is worth up to £66 a week and can now be recognised as the married couple’s pension. It will be paid for the claimant’s entire retirement. On the other hand, where both partners have earned enough to claim for a greater state pension, this is paid rather than the married couple’s pension.


Will State Pensions change?

The new state pension will be different as it is based purely on your own NI contributions. No one else’s will come into the equation. To qualify for the full sum of this state pension you will have needed to have worked and made NI contributions for at least 35 years, and it could be worth up to £144. You will only be able to claim for any other pension at all if you have worked a set number of years – likely to be between 7 and 10 but have not yet been properly confirmed.

For those that do not have any of their own NI contributions, the state pension will not apply as they will not be qualified. For each qualifying year you have built it up, the pension will be worth around £4.11 each week. Therefore if the minimum amount of years is seven then the pension will be worth around £28 a week – With the married couple’s pension, this is less than half the amount that someone may currently qualify for.


Will this affect a lot of UK pensioners?

Due to changes in family life, the amount of pension paid out to married couple’s decreased. However the number of people claiming it is still big; in 2012 1.7 million UK pensioners received all or part of a married couple’s pension. They won’t be affected, but anyone heading for retirement without their own NI record will be caught up in the changes.


What about pensions for people living abroad?

These state pension changes will also affect those soon-to-be pensioners overseas. With no NI contributions from at least 10 years, they will not be legible for a UK state pension.

Around 220,000 people represent a UK pension whilst living in another country. The figure for people drawing the pension overseas grew by 17% over the decade to 2012, and the cost of paying those pensions increased by 37% to £410m, according to the Department for Work and Pensions. Studies say that in 2011 women overseas reaching state pension age were twice as likely to rely in some form on their husband’s NI record for their pension as those in Great Britain (20% vs 10%).


I am already retired, will my pension change?

Not one bit. Changes in pension will only apply to those that reach state pension age after April 2016. The old regime will continue with people that already have a pension before that date.


For Pension and independent financial advice in Peterborough, please don’t hesitate to get in contact – Derngate Wealth Management – 01733 561 615


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