The single tier state pension
The introduction of a single tier state pension will see the end of the second state pension and contracting out and is expected to remove many of the more cumbersome aspects of the state pension. The changes are expected to benefit the self-employed as well as women and low earners who currently find it difficult to accrue an entitlement to the full state pension.
The new single tier pension is set to be introduced in April 2016, a year earlier than initially planned. This means all women born on or after 6 April 1953 and all men born on or after 6 April 1951 will reach the state pension age after the introduction of the single tier pension. Current pensioners and those reaching state pension age prior to introduction of the single tier pension will not be affected.
The amount of qualifying years needed for a full record of National Insurance Contributions will also increase from 30 to 35 years from April 2016. The number of years of National Insurance Contributions to build an entitlement to a state funded pension will also increase from 1 to between 7 and 10 qualifying years. Individuals that have fewer than 35 qualifying years when they reach state pension age will get a pro-rata amount. It has previously been announced the state pension age will be raised from 66 to 67 gradually between 2026 and 2028.