It seems that pensions regulations, both private and state, are changing all the time. It was not long ago that stakeholder pensions were introduced. More recently, A-day brought further changes. In May, a White Paper contained further proposals for change...
The White Paper aims to encourage personal saving for retirement with a low cost savings scheme in which all employees would be enrolled unless they were members of an employer's pension scheme.
Employees would contribute 4% of earnings between approximately £5,000 and £33,000 and employers would pay 3% on the same band of earnings. A further 1% would be added from the employee's basic rate tax relief. Some employees would receive higher rate tax relief as well.
Those not in employment would be able to opt in to the personal accounts scheme.
The White Paper proposes a rise in the state pension age to 66 over the two years between 2024 and 2026 and then from 66 to 67 between 2034 and 2036 and then to 68 in 2044 to 2046.
The basic state pension would be re-linked to earnings from 2012 but only if it is affordable at that time. The state second pension would become a simple, flat rate top-up to the basic pension.
Anyone can request a pension forecast. This can be done by telephone (0845 3000 168), by downloading form BR19 from the pension service website (www.thepensionservice.gov.uk) or online at the same web address.
This will show the amount of pension payable assuming the current NI record continues at the same rate, advise the contributions payable to cover any missed years and indicate how much the pension will be if these payments are made.
Payment of these ‘missing’ contributions is voluntary but may be worthwhile based on average life expectancy. This can be complicated and you may need to contact us for advice.
The payment of contributions for missing years must be made within six years of the end of the qualifying year for which they were due so it is sensible to obtain a regular pension forecast.