Stockport based Booth Ainsworth is giving the heads up for a new flat rate State Pension that will be introduced for everyone next year and which is expected to be around £150 a week, depending on their National Insurance contribution record.
Individuals will need a minimum of 10 qualifying years and the full flat rate State Pension will only be given if they have 35 qualifying years (previously 30 years).
Independent Financial Advisor David Eddleston at Prest Financial Planning said:
“It is possible to contact the Department of Work and Pensions (DWP) to receive a projection of your expected State Pension and check the contribution record. You can maybe make good any shortfall by making voluntary Class 3 contributions (£13.90 a week.)
“Those who are self-employed will find it cheaper to make Class 2 contributions (currently £2.75 a week). If you are an employee or director, provided your salary exceeds the Lower Earnings Limit (currently £5,772 p.a) then, although no NIC is actually due, you are deemed to have contributed for that year.”
£150 a week may not seem a lot to live on but note that it is a 5% annuity rate; you would need a fund of over £155,000 to generate such an income.
This news may prompt you to reconsider your private pension arrangement.