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| Pensions bill: what flat-rate changes mean to married couples | |
| (35 minutes later) | |
| The Queen's speech will include details of the government's pensions bill, which will introduce a flat-rate state pension for anyone reaching retirement age after April 2016. Entitlement to it will be earned by and paid to individuals, which means there will be some changes to what married couples receive. | The Queen's speech will include details of the government's pensions bill, which will introduce a flat-rate state pension for anyone reaching retirement age after April 2016. Entitlement to it will be earned by and paid to individuals, which means there will be some changes to what married couples receive. |
| What happens now? | What happens now? |
| The state pension is paid to people who have made national insurance (NI) contributions over their working life. An individual can earn a pension worth up to £110.15 a week. However, to recognise the fact that historically in many families one spouse often did not work, the state has allowed married partners to claim a pension based on the working partner's NI record, known as the married couple's pension. This is worth up to £66 a week and is paid for the claimant's entire retirement. Where both partners have earned enough to claim a larger state pension, this is paid instead of the married couple's pension. | The state pension is paid to people who have made national insurance (NI) contributions over their working life. An individual can earn a pension worth up to £110.15 a week. However, to recognise the fact that historically in many families one spouse often did not work, the state has allowed married partners to claim a pension based on the working partner's NI record, known as the married couple's pension. This is worth up to £66 a week and is paid for the claimant's entire retirement. Where both partners have earned enough to claim a larger state pension, this is paid instead of the married couple's pension. |
| What will change? | What will change? |
| The new state pension will be based purely on your own NI contributions; no one else's will be taken into account. It will be worth up to £144, but to qualify for the full sum you will need to have worked and made NI contributions for at least 35 years. To qualify for any pension at all you will need to have worked a set number of years – this has not yet been confirmed, but is likely to be between seven and 10. | The new state pension will be based purely on your own NI contributions; no one else's will be taken into account. It will be worth up to £144, but to qualify for the full sum you will need to have worked and made NI contributions for at least 35 years. To qualify for any pension at all you will need to have worked a set number of years – this has not yet been confirmed, but is likely to be between seven and 10. |
| The pension will be worth £4.11 a week for each qualifying year you have built up, so if the minimum is set at seven the pension will be worth upwards of £28.77 a week – less than half of the amount someone might currently qualify for under the married couple's pension if their spouse has full NI contributions. Anyone who does not have enough individual NI contributions will no longer qualify for a state pension. | The pension will be worth £4.11 a week for each qualifying year you have built up, so if the minimum is set at seven the pension will be worth upwards of £28.77 a week – less than half of the amount someone might currently qualify for under the married couple's pension if their spouse has full NI contributions. Anyone who does not have enough individual NI contributions will no longer qualify for a state pension. |
| Will this affect a lot of UK pensioners? | Will this affect a lot of UK pensioners? |
| Changes in family life mean that the amount paid out in married couples pensions has been falling, however the number of people claiming it is still big: in 2012 1.7 million UK pensioners received all or part of a married couple's pension. They won't be affected, but anyone heading for retirement without their own NI record will be caught up in the changes. | Changes in family life mean that the amount paid out in married couples pensions has been falling, however the number of people claiming it is still big: in 2012 1.7 million UK pensioners received all or part of a married couple's pension. They won't be affected, but anyone heading for retirement without their own NI record will be caught up in the changes. |
| What about people who live abroad? | What about people who live abroad? |
| The changes will also affect soon-to-be pensioners who live overseas – without a record of at least seven to 10 years' NI contributions they will no longer be entitled to a UK state pension. | The changes will also affect soon-to-be pensioners who live overseas – without a record of at least seven to 10 years' NI contributions they will no longer be entitled to a UK state pension. |
| About 220,000 people draw a UK pension while living in another country, and pensions minister Steve Webb claims more than half of them have never been British taxpayers. The figure for people drawing the pension overseas grew by 17% over the decade to 2012, and the cost of paying those pensions increased by 37% to £410m, according to the Department for Work and Pensions. It says that in 2011 women overseas reaching state pension age were twice as likely to rely in some form on their husband's NI record for their pension as those in Great Britain (20% vs 10%). | About 220,000 people draw a UK pension while living in another country, and pensions minister Steve Webb claims more than half of them have never been British taxpayers. The figure for people drawing the pension overseas grew by 17% over the decade to 2012, and the cost of paying those pensions increased by 37% to £410m, according to the Department for Work and Pensions. It says that in 2011 women overseas reaching state pension age were twice as likely to rely in some form on their husband's NI record for their pension as those in Great Britain (20% vs 10%). |
| I am already retired, will my pension change? | I am already retired, will my pension change? |
| No. The changes will only affect people who reach state pension age after April 2016. Anyone who is drawing a pension before that date will continue to be paid under the old regime. | No. The changes will only affect people who reach state pension age after April 2016. Anyone who is drawing a pension before that date will continue to be paid under the old regime. |