Enable Independent, IFA’s of Bishop’s Stortford took interest in the new state pension, the government unveiled the biggest shake up to the flat rate pension for over a century, and will benefit couples and stay at home mums the most.
The pension which is due to be introduced in 2017 will be more than £155 per week, and will no longer being means tested. However under the new scheme an individual will build up state pension entitlements after one year of paying National Insurance contributions, however under the new system this will be increased to ten years.
Prime Minister David Cameron stated: 'A single state pension cuts out a lot of the means-testing and also will help a lot of women, a lot of low-paid people who otherwise wouldn’t get a good state pension.
'So a good idea, but it’s long-term – this is for new pensioners, I don’t want to mislead anyone.'
The age of retirement will also rise under the new plans, those teenagers today will probably have to work until the age of 70 before they can claim.
The single tier pension will benefit women the most, as they will no longer be penalised for staying at home and looking after the children, couple’s will also benefit as they will also qualify for the new payment, rather than the less generous one currently in place.
A single tier will enable people to know what they can expect from the state once they reach retirement age. Thirty-five years of NI contributions will result in a full basic state pension.
However for those people who are tied into final salary schemes, they will face higher National Insurance payments, as the right to opt out of the state pension comes to an end.
If you are nearing retirement or need to start planning towards your future, why not give your local, friendly team of Ifa’s a call we will be more than happy to help you plan for your retirement.
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