Looks at gainers and losers from the new State PensionJump to full report >>
There are two parts to the current UK State Pension: the basic State Pension, which is flat-rate, and the additional State Pension, which is partly earnings-related. The additional State Pension was provided through the State Earnings-Related Pension Scheme (SERPS) between 1978 and 2002 and, from 2002 through the State Second Pension (S2P).
The Government legislated in the Pensions Act 2014 to introduce a new single tier State Pension for future pensioners from 6 April 2016. People who have already reached State Pension age at that date will continue to be entitled to the State Pension under current rules.
One of the principles of the reform was that the new State Pension would be set above the basic level of means-tested support. In 2016/17, the starting rate will be £155.65 pw, just above the single rate of the Standard Minimum Guarantee (£155.60 pw). Thirty-five ‘qualifying years’ (of National Insurance contributions or credits) will be needed for the full amount. Those with fewer than 35 qualifying years will receive a pro-rated amount, subject to them having at least ten qualifying years. In general, individuals will qualify for the single-tier on the basis of their own contribution record, so the special rules for marriage divorce or bereavement will end, with some transitional protection.
As implementation approaches, people have increasing been asking what the reforms will mean for individuals. This notes looks at the transitional arrangements and the gainers and losers from the introduction of the new State Pension.
The background to the reforms are discussed in more detail in Library Note SN06525, The new single-tier State Pension (1 December 2015).
Commons Briefing papers CBP-7414
Author: Djuna Thurley