The 6th April 2010 hails in the first of a series of major pension reforms that will affect both when you'll be able to claim your pension and how much you'll be entitled to when the time comes. We explain how these changes will impact you.
Arguably the most pressing change will affect those who are aged between 50 and 54. As, from 6th April this year, the minimum age that you'll be able to claim a personal or company pension will rise from 50 to 55. So, if early retirement is an option that you've been considering it's vital that you discuss your options with a qualified pension advisor sooner rather than later. You can also check the Direct.gov website for more information about how you'll be affected.
From 6th April the number of years' worth of National Insurance contributions you'll need to have made before you're able to claim a full state pension will drop to 30 for both men and women. At the moment men need to have made NI contributions for 44 years and women 39 years before they're able to claim. This will actually mean that more people are able to claim the full state pension.
However, the age at which you'll be able to claim the State Pension is set to rise; this will be done in stages. At the moment women can choose to start receiving their State Pension at the age of 60 and men at 65. However, over the next 10 years this will be brought into alignment so that the pensionable age for both men and women is 65 by 2020.
Once this realignment has been completed the pensionable age for both men and women will be increased to 68. This change will be implemented in year incriments each decade between 2024 and 2046. You can check the Direct.gov calculator
Parents, foster parents and carers will also be affected by the changes, but in a positive way. At the moment many parents and carers who are not working or only working a limited number of hours because of their responsibilities at home miss out on making the National Insurance contributions they need to qualify for a full state pension. However, these reforms will mean that it's now easier to build up your entitlement through a credit-based system that can be combined with any earnings-based National Insurance contributions you make.
However, it will no longer be possible to claim the Adult Dependency Increase. This means that anyone eligible will need to make a claim before the end of a tax year otherwise it will be too late. Again, it's worth speaking to a pensions advisor to find out whether it the right option for you.
Of course, the biggest change of all will take place in 2012 when all workers will be automatically enrolled in a company pension or Personal Account pension that both they and their employers will need to contribute to. Rest assured we'll bring you more information about exactly how this wil work as and when the details are finalised.
