Advice: How will I be affected by changes to the State Pension?

Pat Hutchinson MBE.
Pat Hutchinson MBE.

By Pat Hutchinson MBE, District Manager, Citizens Advice Newtownabbey

Q: I am nearing retirement age and I’ve heard that there are changes coming in April with regard to the State Pension, is this correct?

A: The new State Pension system will be introduced in Northern Ireland on April 6, 2016.

The earliest you can claim new State Pension is when you reach State Pension age. You will be eligible to claim new State Pension if you’re:

• a man born on or after 6 April 1951

• a woman born on or after 6 April 1953

Your new State Pension is based on your National Insurance record. National Insurance contributions or credits on your National Insurance record before 6 April 2016 will count towards your new State Pension.

Qualifying years: You will need 35 qualifying years on your National Insurance record to get a full new State Pension. You will need at least 10 qualifying years to get some new State Pension.

In a qualifying year, you have a National Insurance record if:

• you worked and paid National Insurance contributions

• you received National Insurance credits due to unemployment, sickness or as a parent or carer

• you paid voluntary National Insurance contributions

How much you can get: The full amount of new State Pension will be £155.65 a week.

Under the new system, from April 2016, the actual amount will depend on your National Insurance record. You could receive a higher or lower amount.

If you have made National Insurance contributions or received credits prior to 6 April 2016 and will reach State Pension age on or after 6 April 2016, 35 qualifying years may not give you the full amount of new State Pension. To obtain a Statement of your National Insurance record and see examples of how new State Pension is calculated go to the GOV.UK website.

Valuing your National Insurance record before 6 April 2016: Your National Insurance record before 6 April 2016 is used to calculate your ‘starting amount’ of new State Pension. Your starting amount will be the highest of either:

• the amount you would get under the current State Pension rules (which includes basic State Pension and additional State Pension)

• the amount you would get if the new State Pension had been in place at the start of your working life.

Some money will be taken away from your starting amount if you were contracted out of the additional State Pension.

A person is contracted out of the additional State Pension if they are a member of a workplace pension scheme that provides salary-related benefits in place of the additional State Pension. Both the employee and their employer pay lower rate National Insurance contributions for the time they are contracted out.

As a result, people who have been contracted out may have little or no additional State Pension as they are building up a workplace or personal pension instead.

Starting with less than the full new State Pension: From 6 April 2016 you may be able to get more State Pension by adding qualifying years to your National Insurance record. You can add qualifying years until you reach the full new State Pension amount or reach State Pension age, whichever is first.

Each qualifying year on your National Insurance record after 5 April 2016 will add about £4.45 a week (which is £155.65 divided by 35) to your new State Pension.

Starting with more than the full new State Pension: If you start with more than the full new State Pension, the difference between your starting amount and the full new State Pension is called your ‘protected payment’.

Your protected payment is paid on top of your new State Pension and increases each year in line with inflation.

• Get free, confidential and independent advice from your nearest Citizens Advice – go to www.citizensadvice.org.uk/nireland or call at: Citizens Advice Newtownabbey, Dunanney Centre, Rathmullan Drive, Rathcoole, Newtownabbey, BT37 9DQ. Telephone advice is available 9am – 4pm each day on 028 9085 2271 (Lunch 1:00 - 1:30pm), email advice is available at enewtownabbey@citizensadvice.co.uk