The UK State Basic Pension and the State Second Pension (S2P) will be merged into a single tier state pension to be introduced in April 2017. Some of the provisions are:
- It will be a flat rate amount above the current means tested minimum income support - currently £142.70 per week for a single pensioner.
- To qualify for part pension requires the individual to make national insurance contributions (NICs) for a minimum of seven to ten years. The full amount requires 35 years of contribution history.
- There will be deferral provisions for not accessing but rather receiving an increased pension later.
- Indexation will be in line with earnings.
- Current pensioners and those who reach State Pension age before April 2017 are not affected.
These changes will mean the end of contracting out. For UK residents migrating to Australia, it will result in large amounts of benefits having to be remitted as pension payments under the ITAA 1936. Currently, one can move benefits accrued under the contracted out provision in the employer's fund.
The NetActuary Team