Changes To State Retirement Pensions

Two sets of changes  Changes from April decided by previous government  Changes announced by new government - definite plans - possible plans

April Changes  Rise in State Pension Age - Knock on effects for Pension Credit, Winter Fuel Payment, HB/CTB Personal Allowances, Concessionary Travel  Simpler, more equal pensions - Increased entitlement

Government Plans  Definite plans affect - rise in state pension age with knock on effects for Pension Credit, Winter Fuel Payment, HB/CTB Personal Allowances, Concessionary Travel -uprating of basic State Pension & Pension Credit  Possible plans - flat rate, non contributory State Retirement Pension - Pension Credit or Universal Credit?

Rise in State Pension Age April Nov  For women – age rises from 60 to – affects women born 6/4/50 – 5/12/53 - originally scheduled for April 2020 Dec April  For all – age rises from 65 to – affects all born 6/12/53 – 5/4/60 - originally scheduled for April 2026  Future rise from 66 to 68 to occur sooner than affects all born 6/4/60 onwards

Age for Pension Credit etc  Qualifying age for: Pension Credit Winter Fuel Payment HB/CTB personal allowances Concessionary Travel April Nov - rises from 60 to Nov April - rises from 65 to  NHS free prescriptions & eye tests stay at age 60 for now

Chancellor “We also keep the universal benefits for pensioners, in recognition of the fact many have worked hard and saved all their lives. - free eye tests; - free prescription charges; - free TV licences for over 75s; - and Winter Fuel Payments will remain exactly as budgeted for by the previous Government as promised.”

Simpler, more equal pensions April  Simpler contribution rules2010  Less qualifying years needed2010  New weekly credits for parents & carers2010  More rights for civil partners, wives & husbands2010  Adult dependant increase abolished 2010  Simplify State Second Pension ? From earnings related to flat rate

Contribution Condition New Rules from April 2010  Paid, ‘treated as paid’ and credited contributions all count equally  30 qualifying years are needed for a full basic pension  1/30 th of full basic pension is paid for each qualifying year

Contribution Conditions Previous Rules 1ST CONDITION Paid or treated as paid 1 year's contributions 2ND CONDITION Paid, treated as paid or credited Enough qualifying years across working life Both conditions had to be met

Contribution Conditions Previous Rules  Number of qualifying years needed for full basic pension - Women 39 - Men 44  Minimum number of qualifying years (25%) needed for any Basic Pension to be paid

Home Responsibilities Protection Previous Rules  Reduced number of qualifying years needed for full basic pension  Awarded for each complete tax year where one* of the following applies: - Child benefit for a child aged under 16 - Foster parent - Caring for a disabled person (see CPAG 2009/2010) * A combination is allowed in some circumstances

Home Responsibilities Protection From April 2010  Weekly Credits if one of the following applies: - Child benefit for a child aged under 12 - Foster parent - Caring for a disabled person & not on Carer’s Allowance  Previous years’ HRP converted to credits

Future Credits or not?  New NI credits previously planned for April for grandparents - for certain other adult family members - for looking after “family” children age under 12  Planned abolition of starting credits for 16 – 18 year olds New government has gone ahead with consultation, so may happen.

Marital Status & Pensions New Rules from April 2010  Spouses & Civil Partners - reduced rate basic pension (Cat B) on NI of spouse/civil partner  Separated Spouses & Civil Partners - reduced rate basic pension (Cat B) on NI of spouse/civil partner For men & civil partners, spouse/civil partner must be born after 5 th April 1950 Previously only wives qualified for these Cat B pensions

Marital Status & Pensions New Rules from April 2010 Cat B pensions can be claimed where spouse/civil partner has deferred their pension Previously Wife could not claim Cat B if husband had deferred his pension

Adult Dependant Increase  Claimed for spouse / civil partner under pension age  Abolished from 6 th April 2010 for new claims  If claimed before 6/4/10 will continue until 2020 at latest

Worst Deal  Still living with spouse / civil partner or separated - can increase basic pension up to 60% of their basic pension when they reach SP Age (CAT B) Better deal  Divorce - can increase basic pension up to a full basic by substituting chunk of ex’s NI record for yours (CAT A) Best Deal  Bereavement - can increase basic, additional and GRB For all deals - amount depends on your spouse’s / civil partner’s NI - only NI of last spouse / civil partner can be used For better or worse?

Increasing State Retirement Pension From April 2011 the rate at which the Basic State Retirement rises will be linked either to:  earnings or  prices or  will be 2.5% annually – whichever is greatest

Increasing Pension Credit  Guarantee Credit will increase at the same rate as the basic State Pension in April 2011  Maximum Savings Credit award in Pension Credit will be frozen for 4 years from 2011/2012

Forward Thinking?  Flat rate, £140, pension to replace State Pension & Pension Credit - non contributory - non means tested - based on citizenship or residence  Will Universal Credit have an upper age limit? or Will Pension Credit continue but include help with rent & income related element for children