Flat-rate state pension set at £155 a week
Under new rules aimed at simplifying the state pension system, people reaching pensionable age after 6 April 2016 will receive a new, ‘single-tier’ pension.
In his Autumn Statement, George Osborne also announced that the basic state pension, applicable to current retirees, will rise to £119.30 a week from April 2016.
He said the £3.35 increase will be the highest real terms increase to the state pension for 15 years.
As a result, someone on a full basic state pension can expect to receive around £570 more a year in 2016-17 than if it had been uprated by average earnings since the start of the last Parliament.
This is around £1,125 a year more overall than they received in 2010-11.
Osborne said the changes were “a result of our commitment to those who’ve worked hard all their lives and contributed to our society”.
To receive the full state pension individuals will need 35 years of national insurance contributions. People with less than 10 years of contributions will not receive any state pension.
Not for everyone
Richard Parkin head of retirement at Fidelity International, said while the starting rate of the new flat rate state pension was “undoubtedly a generous deal”, not everyone will receive it.
He said: “People who, at some point in their working life were “contracted out” of the State Second Pension in return for paying less national insurance will find that this impacts adversely on their state pension entitlement.
“Figures from the DWP show that of the people reaching state pension age in the next 20 years, 80% will have been contracted out at some point.
“Consumers should look to see what they will actually get by filling in form BR19 from the Department for Work and Pensions to get a full statement of their benefits.”