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One in four unaware of state pension changes
The new ‘flat rate’ state pension launches in 120 days on 6 April 2016 – but confusion remains over the changes.
One in four Britons (24%) are completely unaware that the state pension system is being overhauled next year, a study by Aviva suggests.
This figure jumps to 27% among the 55-64 age group, most of whom will draw their state pension for the first time under the new rules. That’s the equivalent of two million people in the UK.
There is also widespread confusion about who will and who will not be affected by the changes. One in six people over 75 expect to receive the full flat-rate state pension, despite being too old. To qualify, men have to be 65 or under and women 63 or under.
Despite the confusion, a staggering 80% of people aged 55 and over surveyed said the state pension was important to planning their retirement finances. Almost one in three (32%) said they would not be able to cover basic living costs without it, while a further 27% would find it difficult.
Clive Bolton, managing director, retirement solutions at Aviva UK Life, said: “The state pension should be the foundation on which all other retirement savings are built. It is vital that people take steps to understand their entitlement and consider what actions they can take to supplement this income.
“People may be living and working for longer, but they still need to take responsibility for their own savings – ideally the sooner, the better. Quite simply, the prospects of enjoying financial security in later life are far greater for people with a healthy pot of personal savings and investments to boost their state pension payments.”
What’s changing?
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. This will replace the current basic and additional state pensions.
You’ll be eligible for the new state pension if you’re a man born on or after 6 April 1951 or a woman born on or after 6 April 1953.
If you reach state pension age before 6 April 2016, you’ll get the state pension under the current scheme.
In his recent Autumn Statement, Chancellor George Osborne confirmed the new flat rate state pension will be £155.65 per week.
To receive the full state pension individuals will need 35 years (up from 30 years) of national insurance contributions. People with less than 10 years of contributions will not receive any state pension.
The state pension age for women is increasing to 65 by 2018, before rising to 66 for both men and women by 2020.
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