State pension changes: how will the new rules affect you?

The state pension is changing. From 2017, retirees will receive a flat-rate weekly pension. This will replace the complicated current system, which sees most people receive the basic state pension and then some top-ups, depending on their circumstances.

There has been a lot of confusion about the new scheme since the government outlined its plans in a White Paper earlier this month. Here, we get to grips with some of your key questions.

What exactly will change?

Instead of receiving the basic state pension - currently £107 a week - plus any further income-related top-ups, all pensioners will be entitled to £144 a week in today's money - so long as they have made at least 35 years worth of national insurance (NI) contributions.

The amount will be reviewed each year to bring it in line with earnings, prices, or 2.5% - whichever is higher.

Will I be eligible for the new scheme?

By 2017, the state pension age will be 64 for women and 65 for men. This means all women born after 6 July 1953 and all men born after 6 April 1952 will be entitled to the flat-rate pension. However, the pension age will rise to 66 for both men and women by 2020 - going up again to 67 by 2028.

Read Johanna Gornitki's blog: Pension victory for women - at last!

Will I benefit?

  • Hopefully, the country as a whole will be better off by having a simpler, more transparent system, which should also be cheaper to run in the long run.
  • Women who take time out of work to bring up children will benefit because those years will now count towards the NI contributions needed to claim state pension. They also don't have to worry about losing out on any earnings-related top-ups as it will all be replaced by the flat rate.

The government believes around 750,000 women reaching state pension age in the first 10 years after implementation will receive an average of £9 per week of extra pension.

  • The self-employed, who were previously only able to claim the basic state pension because they pay less NI, will also get a better deal – assuming they build up 35 years of NI contributions.

Or will I be worse off?

  • Anyone retiring after 2017 will have to work five years longer than they would have under the current system because entitlement will depend on 35 years of NI contributions, rather than 30.
  • Women who reach state pension age between April 2016 and April 2017 will not only miss out on the more generous flat-rate state pension because of changes to their pension age, but they are already having to deal with working longer. However, men of the same age will be entitled to the new scheme.
  • Some high earners could have built up a state pension of up to £250 a week, so they would lose out under the new weekly cap of £144.
  • Those with fewer than 10 years of service will no longer be entitled to receive a state pension at all.

Those reaching the state retirement age before 2017, and who are entitled to less than £144 a week, will miss out on the more generous flat-rate state pension under the new system. They are not allowed to defer their retirement until the new changes come into effect, either.

I contracted out of the earnings-related pension. How will I be affected?

Pensions savers who contracted out of S2P or SERPS (State Earnings-Related Pension Scheme)  - to have more control over their investments or to take their pension earlier - will have a deduction made to their £144 a week pension.

The finer details aren't available yet, but this deduction is unlikely to reduce their pension entitlement below the current basic state pension of £107.45 per week.

Your Comments

I presently am paid a State Pension of approximately £150 per week. Does it mean that in 2017, if I'm still around, that this will be cut to £144 per week? I must admit I'm very confused and concerned if this is the future arrangements. Thanks

 I wish that these statements would include, as a first para,
current pensioners are not effected by the incoming new rules,
OR these new rules effect pension payments regardless of age.
This would save some of us reading pages of detail that do not apply.
A happy 75 year old pensioner with some SERPS benefit.

I will be entitled to a State Pension in 2 years time which will be paid after NI contributions have been paid for over 40 years so why should I and others like me not be entitled to the new enhanced pension for which you only need 35 years contribution?
As to your comment that people will have to work longer to achiev 35 years contributions how come I will achieve 45  years by my retirement at 65 ????
This is yet another Government con trick.

I reach 63 my retirement age in may 2016 just missing out by 6 weeks the new pension. I dont start receiving my pension till november 2013 6 months after my birthday why i dont know.
Will they pay me the new pension because of this delay.

I agre about the confusion. You state above that anyone who gets their pension before the new rate comes in in 2017 will not receive it. Just to clarify, does this mean that when I get my pension in Nov 2014, that I will hypothetically still only be receiving £104 p wk (assuming the pension stayed the same) whilst my neighbour who is a couple of years younger will receive £144, therefore making this a 2 tier society of pensioner witha £40 a week difference between 2 pensioners? That is how I read this and it does not make sense, even with idiot politicians agreeing to this

The information you have provided is confusing.on the one hand you state that men born between April 2016 and april2017 will receive the new pension ie "However men of the same age will be entitled to the new scheme"
You go on to say in the next para that those retiring before 2017 and who are receiving less than £144per week will not be entitled to new scheme!,,
Can you please clarify as it is so confusing!,,,,

Many people who have already retired early, to live independently and make no claim on the state until they reach state retirement age, are finding that if they only have 30 years contributions (which they thought would be enough) they will now be penalised and not get the full amount of the new pension. However those of a similar age and with a similar record who are claiming long term benefits will get NI credits and in most cases these will take them over the 35 year hurdle by the time they reach pension age. This is blatant discrimination against those who have probably worked hard, saved for their retirement and are likely to still be paying significant taxes even though not employed any more. The government needs to address this issue and assure all those caught in this trap that if they need five years' NI credits, they will get them.

I worked and saved, then retired early (living off my own means) after achieving 30 Years N.I. contributions. I qualify for state pension in July 2017. I was given a forecast of £169 per week which is the figure that I based my future income on. I am sure that their are a lot of people asking the same question .Do we now have to work for another 5 years to pay N.I.or do we recieve a lot less pension?

My wife will take her NHS pension in April this year and then work 3 days a week for better life work balance. Her State pension is  due 2016. Will the new laws  affect my wife in anyway?

Oupa, yes. And my wife is in the same position. Also her retirement age was increased by this Tory government (in October 2011) by 18 months.
We are both completely screwed by these changes. And yet millionaires get a 5% discount on tax. Disgusting!!!

To calculate your State Pension retirement date enter your details on this website:
If your retirement date is before 6th April 2017 then you will be paid on the current basis, and will need only 30 years of N.I. contributions.
If your retirement date is on or after 6th April 2017 then you will paid on the new flat-rate basis, and will need 35 years of N.I. contributions.
Please note that delaying when you receive your State Pension doesn’t affect your payment basis.

I qualify for a State Pension on 6 July 2015 at age 62yrs 7mths so it seems I won't qualify for the new flate rate pension even though I have 41 years contributions.
I had intended under the current system to defer my pension until I am 65. The benefit of deferring would give me an additional 1% on my basic pension for every  5 weeks I  deferred payment. The idea of course if to give me a better pension in the long term.
Will I still be able to do this. I understand I still won't get the new flat rate but will I still be able to defer to get the additional 1% for 5 weeks deferral? 

it's all as clear as mud ......