State pension shake-up: the not-so-golden years?
Today, the government announced the state pension will be simplified, with retirees from 2017 receiving a flat rate of up to £144 in today’s money. Do you think these proposals could affect your retirement plans?
So what will £144 look like by 2017? With likely inflation taken into account, this should come to around £162 by the time the flat-rate pension is introduced.
At the moment, the full weekly state pension for a single person is £107.45. But this can also be topped up if you factor in pension credits and the state second pension – both of which will be scrapped under the new rules. But if you want to know how to calculate the state pension you’ll receive when you hit retirement age, it’s quite a convoluted process.
The winners and losers
The government’s new proposals will introduce a flat-rate state pension: one amount that’ll apply to everyone who meets the criteria. To receive the full amount after 2017, you will need to have clocked up 35 years of National Insurance contributions - up from 30 years in the current system. The minimum weekly pension, based on 10 years of contributions, will be £41. As it stands, current pensioners will not be affected.
As you’d expect, these proposals will benefit some more than others. In fact, some retirees could end up worse off. However, the pensions system is so complex that simplification is still a worthy aim.
When I think about my own retirement plans, it’s hard to imagine things won’t change again before 2052. We could realistically have eight different governments between now and then: that’s an awful lot of potential tinkering with the system.
The not-so-golden years?
With an ageing population, pensions will increasingly cost more for taxpayers – who’s to say the state pension will be as we know it in 40 years time? For me, the priority is to make a regular contribution to my company pension, in order to supplement whatever I may or may not get from the state when I do retire.
Will the government’s proposals impact your retirement plans? Do you have any alternative plans in place to help you through your golden years?
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