New State Pension in UK Means Only 45% Will Get Full Amount

Financial Planning, Pensions, Retirement Planning

New State Pension in UK Means Only 45% Will Get Full Amount

13 Jan , 2015

UK government figures show that in the first five years of the new, flat-rate state pension system, only 45% of pensioners will be fully entitled.
The new, simplified, ‘fairer’ state pension system will see a single payment of about £150 made to new pensioners from April next year. It applies to new pensioners from April 2016 only.
Recent figures suggest that two million people will not get the full amount. However, the government claims that they will be no worse off than under the current means-tested system.
A freedom of information request submitted by investment firm Hargreaves Lansdown reveals that 45% of those retiring between 2016 and 2020 will get the full amount.
Those with a gap in their National Insurance Contributions will not receive the full amount.
Neither will those with a private or workplace pension who are contracted out of some of the state second pension.
After April 2017, people will also have to work longer, making 35 years' worth of National Insurance (NI) contributions, rather than the current 30, to qualify for the full pension.
Anyone who has paid NI for just a few years will not qualify for the new state pension at all. However, some carers receive NI credits despite being out of the workplace.
The DWP has a state pension calculator that gives a simplified calculation of entitlement.
With massive changes to the pension system coming into force this April (2016), it is worth making a note that the government is set to launch a new pension guidance system to be launched in April and run by the Citizens Advice.

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