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The new single-tier State Pension – what you need to know

Last month, Parliament agreed the Pensions Act 2014, which introduced a series of important changes to the State Pension.


What is the new State Pension?

In a bid to simplify the existing, more complicated system, the government is introducing a single-tier, flat-rate State Pension. The new State Pension will replace the basic and additional pensions currently in place for individuals reaching State Pension age from the 6th April 2016. The single-tier, flat-rate State Pension will only apply to individuals who reach State Pension age after the changes are introduced and will not affect current pensioners.


What is the minimum qualifying period?

When the single-tier State Pension is introduced, the weekly payment will be the equivalent of £144 a week in today's prices. In order to qualify for the full amount, an individual must have 35 years of National Insurance contributions or credits. To be eligible for a State Pension at all, individuals will require a minimum of 10 years of contributions. If someone has accrued between 10 and 34 years of contributions they will receive a proportion of the full State Pension relative to sliding scale.

If an individual has been divorced or their civil partnership has dissolved, they may have been awarded a share of their former partner's State Pension, which is called a pension sharing order. An individual will be paid this at State Pension age, even if an individual does not meet the minimum qualifying period.


How will they work out the starting amount for the new State Pension?

If an individual reaches State Pension age after the 6th April 2016, they will use the qualifying years on their NI contribution record, up to and including the 2015/2016 tax year, to work out how much they will receive under the new rules. At the same time, they will work out what they might have received under the old State Pension scheme.

The highest amount calculated will then be an individual's single-tier foundation amount. The Department of Work and Pensions have released the following example to help illustrate the above.

On 6th April 2016, Jim has 32 qualifying years on his NI contribution record. He has been self-employed for long periods of his working life.

Using the new State Pension scheme rules, Jim would get £135.68 a week (£148.40 x 32/35ths).
Using the existing scheme rules, Jim would get £126.50 a week (basic State Pension of £113.10 and £13.40 additional State Pension).

Jim's starting amount will be the higher of these two amounts, which is £135.68 a week.

If an individual's foundation amount is equal to the full single-tier amount, this is what they will receive at State Pension age. The amount will not increase, even if further qualifying years are added to their NI record.

If an individual's foundation amount is more than the full single-tier they will get the extra amount as a separate protected payment, which will be paid on top of the full single-tier pension.

If you have any questions regarding the new single-tier State Pension, please contact Retirement and Investment Solutions on 01489 878300 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

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