Skipton Financial Services
Friday, August 25, 2017 - 13:17

State pension

 

The flat rate state pension

This is a weekly income you will be eligible to receive from a certain age, which is guaranteed for the rest of your life.

The state pension age (the point you become eligible for state pension) is timetabled to increase over the next few years – and the rise is particularly big for women.

Previously, women reached state pension age at 60 and men at 65. By October 2020, it will be 66 for both.

  • If you were born between 6 April 1960 and 5 March 1961, you’ll reach state pension age between 66 and 67.
  • If you were born between 6 March 1961 and 5 April 1970, you’ll have a state pension age of 67.
  • If you were born between 6 April 1970 and 5 April 1972, you'll reach state pension age between 67 and 68.
  •  If you were born after 6 April 1972, you can start receiving state pension at 68.

The Government will continue to review state pension age and further increases are expected.

For the 2017/18 tax year, the state pension is £159.55 a week. To qualify for the full amount you need to have made at least 35 years’ worth of National Insurance contributions. If you are below this, you will receive a percentage of the weekly income.

Contracting out

If your employer ran a contracted out pension scheme (which stopped being an option after 6 April 2016), you didn’t contribute to the Additional state pension for the period you were in the scheme. This will impact how much state pension you qualify to receive.

By being contracted out you will have been making lower National Insurance contributions in return for extra pension in your workplace scheme. But this means you won’t be entitled to the same level of State Pension as those who weren’t contracted out (and so were making larger National Insurance contributions).

If you carry on working for a number of years after 2016 – making full rate National Insurance contributions – you can build up further state pension until you reach the full level of new state pension.

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