The single-tier state pension was introduced in April 2016, but the way in which it was announced has drawn criticism. The lack of publicity surrounding the flat pension of £155 has prompted the House of Commons Work and Pensions Select Committee to state in a recent report that government communications were “contributing to confusion about the new system.”
The DWP has now announced that it will be sending letters to over 100,000 people telling them that they will not qualify for any state pension at all. This loss is the result of a change to the qualifying requirements for a state pension.
Under the previous system, an individual only had to have had one year’s National Insurance contributions/ credits to accrue a small entitlement to a state pension. Under the new single-tier system, there is no entitlement until ten years’ contributions/credits have been clocked up.
Pension legislation is continually evolving and very rarely does it lead to an upgrading of benefits. For example, if you were a member of a final salary pension scheme between 1978/79 and 1987/88 you could also be on the losing side because under old rules your guaranteed minimum pension (GMP) would have been inflation-proofed by the state, but this is no longer the case.
These two examples are a reminder of the importance of obtaining projection of your pension benefits and reviewing whether your current provision is likely to meet your retirement needs. You may wish to seek expert advice to avoid potentially costly pitfalls.
If you have any questions or worries about your pension, please get in touch with our wealth management team on 01254 679131 or email firstname.lastname@example.org.
PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.