Pensions made fairer and simpler

From April next year, the State Pension will be fairer and simpler, especially for women and carers.

This is the start of a one year countdown to the State Pension changes and women over 55 years of age are urged by the Social Development Minister, Margaret Ritchie, to take practical steps to improve their retirement finances.

The Minister said: “ People are living longer, are healthier and spending longer in retirement than earlier generations. It is more important than ever that individuals know their options and plan accordingly.”

Step one is to request a State Pension forecast to show how many years of National Insurance contributions have already been built up and the amount of State Pension a person can expect.

Then, as the State Pension age for women will rise gradually from 2010, step two is to generate a personalised due-date using the pension service online calculator.

If a forecast shows missing National Insurance years, the third check is to find out if buying extra contributions would give a bigger State Pension. People can already look into filling the most recent six years, but from April 2009 anyone with 20 or more qualifying years, reaching State Pension age between 6 April 2008 and 5 April 2015, may be able to buy up to 6 more.

From 2010, filling gaps in National Insurance records could be worth even more as the pensions reforms reduce the years needed for a full basic State Pension from 44 years for a man and 39 years for a woman, to 30 years for both.

The fourth step is to check for forgotten private pensions. An estimated three billion pounds lies unclaimed in pension accounts. Online the free Pension Tracing Service can help uncover any forgotten personal or work pensions.

Finally, people approaching retirement should consider whether deferring their State Pension would make financial sense. If they put off their State Pension, they can get a higher weekly amount or a lump sum if they defer for at least a year, when they decide to take the cash.

A simple checklist has been drawn up to help people take full advantage of these changes. These changes and further information about services are available online at the DSD website and from the Pension Service enquiry line Tel: 0845 601 8821 (or Text phone 0808 100 2198).

Notes to Editors:

1. From 6 April 2009, people who reach State Pension age between 6 April 2008 and 5 April 2015 and have 20 or more qualifying years for State Pension may be able to purchase up to six additional years voluntary National Insurance contributions. The price of a voluntary Class 3 contribution will be £12.05 a week.
2. Between 2010 and 2020, State Pension age for women will rise gradually to equalise with that for men. This is part of changes introduced to make the pensions system simpler and fairer. From 2010 both men and women will require 30 qualifying for entitlement to a full basic State Pension, rather than the 44 years for a man and 39 years for a woman needed now.
3. A direct mailing exercise will take place between April 2009 and January 2012 targeting 50,000 women in Northern Ireland affected by the equalisation changes. The mail-shot will inform each individual of the actual date they will reach state pension age and provide more general information about the State Pension reforms.
4. The State Pension age will rise very slowly and for many, it will be a matter of months. It is important that people nearing retirement to know the facts and plan ahead. A recent Standard Life survey on people aged between 46 and 65 showed that two fifths wanted to be involved at work but on their own terms, compared to just 15% of their parent's generation. One in 20 wants to embark on a new business venture.
5. The introduction of a National Insurance credit for parents and carers recognises and rewards the different ways in which people contribute to society and will ensure that parents and carers have improved opportunities to build up State Pension entitlement.
6. Further news media information from DSD Press Office tel 028 9082 9000 or out-of-hours contact the Executive Information Service Duty Press Officer on pager 07699 715 440.