British state pensions have been the subject of debate over the last few years. Some have been seen as mostly positive such as Pension Freedom, others have been seen in a more negative light such as changes to retirement age for women.
What has gone largely unnoticed is that the flat rate of pensions has changed, and you could be entitled to a flat rate of £200 per week. Read on to see if you meet the criterion.
The Old and New State Pension Scheme
There are several factors that come into play which determines your flat rate. They include:
How many years National Insurance (NI) contributions you have made up to the 6th April 2016. At this point, the Department of Work and Pensions (DWP) makes two calculations. One, under the old state pension rules, and one under the new. Whichever amount is higher, you will receive this amount of pension. This is called your ‘Starting amount’.
So, under the old rules, you would be entitled to a flat rate of £122 per week if you have paid 30 years or more National Insurance contributions. This would be boosted by any SERPs contributions. Conversely, reductions are made on any NI contributions that were contracted out.
This can push your pension up to a flat rate to £200 per week.
Under the new scheme, you will receive £160 per week for 35 years or more NI contributions minus any period of contracting out your NI contributions.
However, any excess NI contributions will count towards your flat rate pension up until 6th April 2016. This can push your pension up to a flat rate to £200 per week.
From 2016 anyone that has hit their flat rate figure under either scheme will no longer be able to contribute to their flat rate. It could be worth seeking advice from a competent financial planner to determine how best to invest in your retirement if you are in this position.
With changing government state pension rules change sometimes for the better but often for the worse. By taking out a private pension plan you can protect your pension and get a better deal. My award winning financial planning services can help you achieve this.
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Source: Daily Mail