The New State Pension
The new state pension was introduced on 6th April 2016. This affects everyone who has yet to reach state pension age.
The old system was too complicated to work out how much you would receive in old age, making it difficult to plan for retirement. The new State Pension was introduced to simplify the situation.
The full State Pension is based on your National Insurance (NI) contributions only. You will need 35 years contributions to get the get the full amount which is currently £164.35 per week.
Working out how much you’ll receive is very straightforward if you’re just starting work and haven’t built up any State Pension.
For example, 25 years of NI contributions means a state pension of 25/35ths of the full amount. However, if you have less than 10 years, you won’t normally qualify for any State Pension. It’s a good idea to get a forecast to see what you’ve built up so far so you know here you stand. This is available from the government website by clicking here.
The new State Pension increases each year by whichever is the highest:
earnings – the average percentage growth in wages
prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index
You can still get a State Pension if you have other income like a personal pension or a pension from work.
There is no perfect solution to your retirement planning, however, one thing is for certain; for most people this will only provide for a basic lifestyle.
In order to enjoy retirement and not have to work for the rest of your life you will need to make extra provisions.