August
2010
Pension Changes – How the Government Modifications to Pension Rules Could Affect You
On 6 April this year, a number of changes were introduced by the Dept of work & pensions targeted at helping adult females, carers and small wage earners in retirement, but it was not good news for every person.
One of the most important alterations is the enhanced min. age for getting a retirement income. From 6th April, the nominal pension age was increased to age fifty five, affecting more than four million people who were born between 6 April nineteen fifty five and the 5th April nineteen sixty who will unfortunately have to postpone for up to 5 yr to take their pension income.
The state pension age for adult females also began to rise from 6 April until it reaches sixty five in two thousand and twenty. By thousand and twenty six , it is set to increase to 66 for every person, until it ultimately gets to 68 in twenty forty six.
Other changes include a reduction in the National Ins (NI) contributions necessary to qualify for the full basic state pension, which increased from £95.25 a week to £97.65 a week from the sixth April. Men and adult females will now need to add up just 30 years of contributions, which the state forecasts will now allow for an extra forty thousand adult females who reach pension age in the next tax yr to qualify for the maximum state pension.
The state second pension will also be affected by the reforms & now payments within the upper earnings threshold have been reduced from twenty percent to 10 %. At some point, this will be moved to a flat-rate payment rather than an earnings-related pension, and will proceed to be linked to inflation, not pay.
A different credits system replaces the Home Responsibilities Protection (HRP) scheme, which is designed to assist parents & carers to qualify for the state pension. From the sixth April, valid years can immediately be built 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 government pension age after 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 self invested personal pensionadvice to clients in the Bristol Area
