10 things to know about the changes in pensions

The British government has made changes in the pension scheme. Following are 10 things you need to know about the changes
1. The single-tier state pension will be set just above the basic level of means-tested support (the Pension Credit standard minimum guarantee is £151.20 a week in 2015)
2. It will be available only to men born on or after April 6, 1951 and women born on or after April 6, 1953.
3. If you were born before these dates, you will not be able to defer your state pension age to qualify for the new single-tier pension.
4. The number of qualifying years of national insurance (NI) contributions or credits needed for the full new state pension will rise from 30 to 35.
5. The rules for marriage, divorce and bereavement will end. Spouses and civil partners will not be able to claim state pension based on a partner’s NI contributions. Widows and widowers will no longer be able to inherit a partner’s pension. Divorcees will not be allowed to substitute their ex-partner’s NI record for their own.
6. With few exceptions, no one can build up more than the full single-tier rate before they reach state pension age, even if they continue to contribute to NI for longer than 35 years. In the long term – by 2040 – the full single-tier rate will be the maximum payable for all.
7. The “flat-rate” pension will not be paid to everyone, after new arrangements begin in April 2016. People with a starting entitlement higher than the rate of the single tier from a combination of the old basic state pension and the State Earnings Related Pension Scheme will receive the higher amount. Others who previously “contracted out” may receive less than the full rate.
8. Contracting out will end, including for people in occupational pension schemes. They and their employers will no longer receive NI rebates.
9. Those who contracted out of the state second pension will have a deduction from their new single tier, as their state pension entitlement will be delivered through a private scheme instead.
10. It will still be possible to delay claiming a state pension and thereby boost it. But the terms will be less generous. The rate of increase for deferring a full year of the single tier will fall from 10.4 per cent to 5.8 per cent. The option to receive a cash lump sum will end.