State pension changes cause confusion and misery

Chris Torney / 23 November 2015 ( 05 April 2016 )

Many people fear they will lose out under the new state pension. Women born between 6 April 1951 and 5 April 1953 will suffer a double blow.

The government is taking steps to try and clear up confusion over the new state pension, which came into effect on 6 April 2016.

Many people who are due to reach their official retirement age in the next few years say they are not sure how the new system will work. And there are concerns that many will be worse off as a result of the changes.

Should you defer your state pension to boost your income?

How is the state pension changing?

Anyone who reaches state retirement age on or after April 6 2016 will be eligible for the new pension. For men, this means those who were born on or after 6 April 1951 and for women, those born on or after 6 April 1953.

The main difference is that the new pension pays a flat weekly rate of £155.65. This replaces the current basic state pension of £119.30.

Under the new system, the means tested pension credit – which gives top-ups to pensioners on low incomes – is being scaled back, while the State second pension (S2P – previously known as SERPS) is being gradually phased out.

The end of S2P means that people will no longer be able to accrue substantial extra pension entitlement by paying National Insurance, as is the case at present.

Could you claim pension credit?

Will everyone get the full weekly rate?

No. Entitlement to the full new pension will depend on how many years’ National Insurance contributions (or credits) you have built up. Anyone with less than 10 years’ contributions will get no entitlement, while the full amount is available only to those with 35 years’ contributions or more.

However, it is possible to pay a lump sum to fill gaps in your National Insurance history.

If you were contracted out of S2P or SERPS at any point in your working life, this may result in a lower new state pension entitlement. However, people who have accrued a lot of S2P or SERPS could well get more pension than the flat-rate amount.

Who else is losing out?

There has also been criticism over the treatment of women born in the run-up to April 6 1953: this group will not be eligible for the new, potentially more generous pension, unlike men of the same age.

But these women have also suffered because, over the past few years, they have been forced to delay their retirement as the government has changed women’s state pension age.

Are you one of the women disadvantaged by the changes to the state pension?

How to find out more

If you want to get a state pension forecast and are 55 or older, visit this government site.

For people under 55, visit this web page to get a forecast.

To pay voluntary National Insurance contributions and possibly boost your State pension entitlement, visit this site.

If you reached State pension age before April 6, you can top up your pension by paying a lump sum. Click here to find out more.

Read more about topping up your state pension.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.