Money
Pensions
Easier to get your pension
Qualifying for a state pension will become easier in two ways:
Firstly, the number of years of National Insurance contributions needed to get a full pension will be cut.
At present, a woman needs 39 years and a man 44 (though that can be reduced by five if he stops work at 60).
From April 6, 2010 that period will be slashed to 30 for men and women. That will help many women who did not spend all their lives working and paying full National Insurance contributions.
It will also help the generation who went to university in the Sixties and have gaps at the start of their working lives.
From April 2010 there will be no minimum number of contributions to receive some pensions. At present, if you have fewer than 10 years you cannot get any pension at all. In future even one year will give some - very small - state pension entitlement.
The change also means that many people will have paid enough contributions to get a full pension by their late forties or early fifties. But if they are working they will have to continue paying National Insurance contributions right up to pension age.
There is now great uncertainty about the value of paying extra contributions to fill a gap in your record.
Many people who have done so in the past may have wasted their money if they will reach pension age on April 6, 2010 or later, as the new system may give them a full pension anyway.
It is probably safest not to pay extra National Insurance contributions until the details of the changes have gone through Parliament next year.
Many people, particularly women, do not spend even 30 years in paid work, but they often spend many years raising children or caring for relatives.
Another major improvement will give non-working parents full National Insurance credits for each week they receive child benefit.
At present they can get what is called Home Responsibilities Protection (HRP) for each whole year of childcare. That boosts their pension entitlement, but not as much as if they had paid National Insurance contributions.
There are also improvements for people who care for a disabled person. At present, the rules about getting credits or HRP are complex and do not normally apply to anyone who spends fewer than 35 hours a week caring.
From April 6, 2010 everyone caring for a disabled person for at least 20 hours a week will get a National Insurance credit for each week.
Any HRP already earned for childcare or caring for disabled people will be converted into National Insurance contribution credits for anyone reaching pension age from April 2010.
At present, less than half the women who reach pension age get a full pension. By 2020 these changes will raise that to 90%. They will also help some men.
Written by Paul Lewis
