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What's Happening To The State Pension?

In the next few months with a general election on the horizon, millions of voters and savers will be eagerly waiting for news of what provision there will be for them in their retirement.

The state pension, which is currently capped at a maximum of £113.10 per week, has been amended, adapted, altered and changed by successive governments over the last half century or so. The result can be that state pensions confusing, contradictory and often unfair.

New government rules that will eventually come into effect from 2016 onwards have been drawn up in order to make state pensions simpler and fairer. In this article we will explore the new changes and how they will affect your financial future.

Flat Rate

State Pensions are related to National Insurance contributions, a pension is simply the result of your money, plus some extra from the government which is hopefully invested wisely.

Currently, people who take a break from contributions such as new mothers on maternity leave are penalised and people who switch from full time employment to self employment may find they have less in their State Pension pot.

The new State Pension that will be introduced in 2016 will be worth no less than £148.40 per week (this is based on current rates of inflation and might be higher in 2016). The final figure will be set in August this year

Civil Partners

Since 2010 if a married man or woman had lower National Insurance contributions, they were able to increase the size of their state pension based on the contributions of their wife or husband.

Now in 2015 couples in civil partnerships will also be able to benefit in the same way, the amount will be capped at the level of the basic state pension, which is £67.80 per week.

Married couples and civil partners who benefit from this do not have to live with their partner or even wait until their partner has drawn their pension, as long as they are eligible to draw their own.

Life Expectancy

The increases in life expectancy across Britain have had a dramatic effect on the overall cost of state pensions.

The number of years in which people are likely to be claiming has increased dramatically since State Pensions were introduced. In addition to this, the population itself is ageing, presenting the government with a major dilemma.

The answer is to gradually increase the State Pension age, and after 2020 retirement ages for men and women retiring after January 1st that year will increase to 66, rising to 67 by 2028.

If you were unsure what your State Pension age will be there is a Pension Calculator accessible to everybody.

Review all your pensions

The three months before the end of the tax year in April are some of the most important in the financial calendar, particularly for savers.

If you have a number of pension pots, including your state pension, if might be a good idea in the coming weeks to review them.

Carrying out an audit of the overall value of your pensions is relatively straight forward and is especially important given the forthcoming changes to pension entitlement. The most important task relating to state pensions is to contact the Future Pensions Centre to find out exactly what you are entitled to and when you will receive it.


The world of private pensions was changed forever last April with the ending of compulsory annuities on the vast majority of pensions, those insurance policies that savers were obliged to purchase with their pension pots.

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