There is a huge overhaul coming to State Pension

These new reforms begin to roll out in 2016. The Government are introducing a new single -tier pension.

This is meant to replace the current complicated system with a number of earnings related add-ons.
Like any new system there are winners and losers.

Who are the possible winners?

  • Women, cares and low paid.

Why?
Because they are most likely to have spent long periods out of the labour market, or on low earnings.

  • Self Employed

Why?
The self employed do not currently quality for the second state pension, only the basic rate, currently £113 per week.

Who are the possible losers

After 2016 those with less than 10 years of contributions will miss out.

  • High earners

Under the current system high earners can accrue a state pension over the basic state pension will be capped, regardless of their length of contributions or salary.

  • Younger people

Not the same opportunity to build up bigger state pension

  • Private sector final salary schemes

Their NI Contribution will rise after 2016.

Source Financial Times Money Supplement
 

Please contact Ken Hart for a full breakdown of how this may affect you.

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