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