Flat Rate State Pension

 

A simpler flat rate State Pension is set for April 2016.

Based on 2012/13 terms the flat rate State Pension will be set at £144 per week, just above the minimum income currently guaranteed under the Pension Credit.

The intention is that the State Pension will increase annually by the highest of price inflation, earnings inflation and 2.5% although only increases in line with earnings are guaranteed.

The full pension will be paid to those with at least 35 'qualifying years' of National Insurance contributions or credits.  This is an increase from the current 30 years for the Basic State Pension.

Where 35 years NI contributions or credits have not been achieved, proportional reduction will apply.

There will also be a minimum contribution requirement set at 10 years.

The State Second Pension (S2P) will finished and this will end contracting out under Defined Benefit Schemes.

How the Government deals with those who have been contracted out either through a Defined Benefit or Personal Pension is yet to be confirmed.

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