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| Winners and losers under the new state pension | Winners and losers under the new state pension |
| (35 minutes later) | |
| The new flat-rate, or single-tier, state pension is coming into effect for everyone who retires after 6 April, 2016. | The new flat-rate, or single-tier, state pension is coming into effect for everyone who retires after 6 April, 2016. |
| The government argues it will be simpler - and that over the next 15 years, most people will end up getting a higher pension. | The government argues it will be simpler - and that over the next 15 years, most people will end up getting a higher pension. |
| While the current basic state pension is worth around £120 a week, the new one will start at £155. | While the current basic state pension is worth around £120 a week, the new one will start at £155. |
| Women, and the self-employed, are among the groups that, on average, should benefit. | Women, and the self-employed, are among the groups that, on average, should benefit. |
| But there will be losers too - especially for those currently in their 20s and 30s. And in the long run the new system will save the government money. | But there will be losers too - especially for those currently in their 20s and 30s. And in the long run the new system will save the government money. |
| So how will the flat-rate pension work? | So how will the flat-rate pension work? |
| What happens if I have already retired? | What happens if I have already retired? |
| If you have retired before 6 April, 2016, you will continue on the old two-tier system. That is, you will receive a basic state pension, plus top-ups. | If you have retired before 6 April, 2016, you will continue on the old two-tier system. That is, you will receive a basic state pension, plus top-ups. |
| These consist of pension credit, for the low-paid, as well as payments from the second state pension (previously known as Serps), if you qualify. | These consist of pension credit, for the low-paid, as well as payments from the second state pension (previously known as Serps), if you qualify. |
| Who will be eligible for the new state pension? | Who will be eligible for the new state pension? |
| Men born after 6 April 1951, and women born after 6 April 1953. | Men born after 6 April 1951, and women born after 6 April 1953. |
| To qualify for any pension at all you will need to have 10 years of National Insurance contributions (NICs). Previously there was no minimum. | To qualify for any pension at all you will need to have 10 years of National Insurance contributions (NICs). Previously there was no minimum. |
| As a result of this, Age UK has calculated that 70,000 people will no longer qualify for any state pension. | As a result of this, Age UK has calculated that 70,000 people will no longer qualify for any state pension. |
| NICs don't have to be paid in consecutive years, and some parents, carers and jobseekers have special exemptions. Each year of NICs will add £4.44 a week to your pension, at current prices. | NICs don't have to be paid in consecutive years, and some parents, carers and jobseekers have special exemptions. Each year of NICs will add £4.44 a week to your pension, at current prices. |
| To qualify for the full new state pension, you will need to have 35 qualifying years. Previously this was 30 years. | To qualify for the full new state pension, you will need to have 35 qualifying years. Previously this was 30 years. |
| Check your own state pension age here | Check your own state pension age here |
| Will some people get less than £155? | Will some people get less than £155? |
| Yes. Anyone who contracted out of the second state pension before 6 April 2016. This will particularly be the case for millions of teachers, NHS workers, police officers and members of the armed forces - in other words public sector employees. | Yes. Anyone who contracted out of the second state pension before 6 April 2016. This will particularly be the case for millions of teachers, NHS workers, police officers and members of the armed forces - in other words public sector employees. |
| Such workers will have paid a lower rate of NICs. Instead they will have paid extra into a workplace pension scheme. As a result they will be paid a reduced state pension. | Such workers will have paid a lower rate of NICs. Instead they will have paid extra into a workplace pension scheme. As a result they will be paid a reduced state pension. |
| How much less will depend on how long they were contracted out for. Government figures show that only 45% of pensioners will get the full amount in the first five years of the new state pension. As many as two million people will not get the full amount. | |
| How can I tell if I was contracted out? | How can I tell if I was contracted out? |
| Look on an old payslip. On the National Insurance line, the letter "D" or "N" means you were contracted out. "A" means you were not contracted out. However, from 6 April 2016, no-one will be contracted out, as contributions to the second state pension will end. | Look on an old payslip. On the National Insurance line, the letter "D" or "N" means you were contracted out. "A" means you were not contracted out. However, from 6 April 2016, no-one will be contracted out, as contributions to the second state pension will end. |
| Those contracting back in will therefore go back to paying the standard - higher- rate of NICs. For most people their contribution rate will rise from 10.6% to 12% of qualifying salary - or around £37 a week on average. | Those contracting back in will therefore go back to paying the standard - higher- rate of NICs. For most people their contribution rate will rise from 10.6% to 12% of qualifying salary - or around £37 a week on average. |
| Click here to get an estimate of your own state pension | Click here to get an estimate of your own state pension |
| Will some people get more than £155? | Will some people get more than £155? |
| Yes. Anyone who paid into the second state pension will retain that as a protected payment and could therefore earn more than £155. In some cases, part of the pension credit payment will also be retained. | Yes. Anyone who paid into the second state pension will retain that as a protected payment and could therefore earn more than £155. In some cases, part of the pension credit payment will also be retained. |
| No one will lose out in reality under the new system - in the early years - as in effect there will be transitional arrangements. | No one will lose out in reality under the new system - in the early years - as in effect there will be transitional arrangements. |
| Who will be the long-term losers? | Who will be the long-term losers? |
| Over the long-term, younger people will lose out. Many will get less under the new system than they notionally would have received under the old system. | Over the long-term, younger people will lose out. Many will get less under the new system than they notionally would have received under the old system. |
| This is because they will pay standard NICs, yet they won't qualify for the second state pension, which is being abolished. | This is because they will pay standard NICs, yet they won't qualify for the second state pension, which is being abolished. |
| The Pensions Policy Institute has calculated that three quarters of those now in their 20s will lose a notional £19,000 over the course of their retirement. | The Pensions Policy Institute has calculated that three quarters of those now in their 20s will lose a notional £19,000 over the course of their retirement. |
| Two-thirds of those now in their 30s will lose £17,000. However the remainder will gain an average of £10,000 in both cases. | Two-thirds of those now in their 30s will lose £17,000. However the remainder will gain an average of £10,000 in both cases. |
| Others with less than 35 years of NICs will also lose, as previously they would have qualified for a full state pension with just 30 years of contributions. | Others with less than 35 years of NICs will also lose, as previously they would have qualified for a full state pension with just 30 years of contributions. |
| Who will be the long-term winners? | Who will be the long-term winners? |
| Over the first 15 years of the new state pension, the government says that three-quarters of those reaching state pension age will get a higher pay-out than they would have done under the old system. | Over the first 15 years of the new state pension, the government says that three-quarters of those reaching state pension age will get a higher pay-out than they would have done under the old system. |
| That means that by 2030, three million men and three million women will benefit. | That means that by 2030, three million men and three million women will benefit. |
| However, government documents show that the proportion of people doing well will gradually decline the further out you look. | However, government documents show that the proportion of people doing well will gradually decline the further out you look. |
| By 2050, around half of retirees will get a higher pay-out, with half getting a lower pay-out. Assuming a pension age of 70 by then, you can make this generalisation: | By 2050, around half of retirees will get a higher pay-out, with half getting a lower pay-out. Assuming a pension age of 70 by then, you can make this generalisation: |
| People born before 1980 can, on average, expect to do better out of the new system. People born after that date are likely to fare worse. | People born before 1980 can, on average, expect to do better out of the new system. People born after that date are likely to fare worse. |