BENEFITS EXPERT: Questions about the new State Pension

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At 57 I do not expect to work anymore. My husband is retired and we live on his pensions. I recently contacted you because I had no idea what State Pension I could expect, or even when I would get it.

 You told me my pension age was 66 and advised me to get a pension statement from the Pension Service by ringing 0345 300 0168.

 They replied saying that I had 41 ‘qualifying years’ of National Insurance to date which has earned me a pension of £151.25 a week. However, I have heard of a new pension coming in next year. How will this affect me, if at all?

Under the current system you have sufficient years of National Insurance for the full basic State Pension (currently £115.95 a week). In addition you appear to have earned some State Additional Pension and Graduated Retirement Benefit.

 People like you, who reach State Pension Age from April 6, 2016, will receive the new Single-Tier Pension.

 This will be a flat-rate pension that will replace the various ‘bits and pieces’ that make up the current State Pension.

 The Chancellor is expected to announce how much this pension will be when he makes his Autumn Statement on November 25.

 The State Pension entitlement that someone builds up under the current scheme will be taken into account when their Single-Tier Pension is calculated.

 So you will receive at least as much as the £151.25, at today’s values, that you have earned prior to April 6, 2016. But if the full Single-Tier Pension is more than this, you could be due for more.

 However, not everybody reaching pension age in the first years of the new scheme will receive the Single Tier Pension at the full rate. In particular, this applies to people who have been in ‘contracted out’ works pension schemes.

 During periods when they were ‘contracted out’, they paid lower National Insurance Contributions than those who were in the State Additional Pension scheme.  

 To reflect this difference, their Single-Tier Pensions may be reduced.

 So your pension rate could depend upon whether or not you have been ‘contracted out’. If you are unsure, check if your State Pension Statement shows a ‘contracted out deduction’ in the calculation.

 If it does you can expect to get less than the full Single-Tier Pension. If it does not you should get the full rate.

 I would suggest you request a further pension statement nearer to your 66th birthday. By then you should be able to get a definite idea of what you would be due and whether paying further National Insurance would help your situation.