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Future changes to state pensionsIt’s estimated that more than two-thirds of today’s 35-year-olds will live to see 85, and one in seven will celebrate their centenary. The fact that we are living longer has prompted a number of changes to state pensions to reduce the burden of future costs.
First, the state pension age for women born on or after 6 April 1950 will increase gradually to 65 between 2010 and 2020. Then, from 2024 to 2046, the state pension age will increase still further for both men and women. This increase will be gradual, happening over two years every decade as follows:
The age you can claim your state pension will be determined by when you were born. You can find out exactly when you will be able to claim your state pension by using the state pension age calculator on The Pension Service website at The Pension Service.
From 2012 the Government has also promised to re-establish the link between state pensions and earnings, which was abolished in 1980, and the number of years needed to qualify for full basic state pension will be reduced to 30.
There will be weekly national insurance credits for carers of children and the severely disabled who spend more than 20 hours a week on caring duties. The Second State Pension will evolve into a flat rate system by around 2030, and a new scheme of "personal accounts" will be introduced, also from 2012. Workers aged between 22 and state pension age will be enrolled automatically in the scheme, although they will be able to opt out. You will have to contribute 4% of your salary, while your employer will be obliged to put in 3%. The government will top with up with 1% through tax relief.
Unlike S2P, the self-employed and those not in work will be able to join the scheme.
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