From April, people reaching state pension age will receive a “flat rate” worth £155.65 a week, instead of the current basic pension worth £119.30, which has additional elements. Most people will not receive the headline amounts, but will receive more or less depending on their employment circumstances. The government’s own figures show that the majority of people retiring before 2040 will be better off. Those retiring afterwards are largely worse off.
There are problems - pension schemes are going through a “data reconciliation” process with HMRC which is due to end in 2018. This process is not guaranteed to find all errors, however the data for people “contracted out” their national insurance payments between 1978 and 1997 should be accurate by then.
The Government will then decide whether to “amend” state pensions that are already in payment – if they are wrong.
Most people’s first pension savings is likely to be through work. Many companies already offer a scheme and the number is rising thanks to the “automatic enrolment” programme that will eventually mean all employees are opted into a basic scheme.
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