The Class 3A voluntary NICs scheme was originally announced in the 2014 Autumn Statement . The new scheme will remain open for 18 months (from 12 October 2015 to 5 April 2017) as an option for existing pensioners to increase their state pensions, ahead of the introduction of the new State Pension in April 2016. To top up with the scheme, individuals must be entitled to the basic State Pension or Additional State Pension. Men aged 65 or older (born before 6 April 1951) and women aged 63 or older (born before 6 April 1953) will be able to buy additional State Pension, worth up to £1,300 a year. The State Pension top up not only provides extra income, it is also guaranteed for life, protected against inflation and inheritable in most cases. The cost of a State Pension top up is based on a person’s age and takes average life expectancy into account. For a 65-year-old, an extra £10 of pension a week will cost £8,900, whereas for a 75-year-old the contribution rate for the same amount of pension is £6,740. Contribution rates decrease with age, so a person should consider whether to wait until their next birthday to apply.
If there are gaps in people’s National Insurance record, it may be more cost effective to make voluntary contributions first.
There is a State Pension top up calculator available which illustrates the contribution rates based on age and the additional amount someone wishes to receive.
Further information on the State Pension top up is available through GOV.UK .
Pot follows member and defined ambition pensions put on hold 19 October 2015
Defined ambition pensions and pot follows member (automatic transfers) were both key policies put forward by the former pensions minister. Ros Altmann, the current pensions minister has said that the market needs time and space to adjust to the other pension reforms and that these areas will be revisited at a later date. News from Professional Adviser reports that the pensions minister has confirmed that the pension policies on defined ambition and pot follows member are to be put on hold as it is not the right time to ask the pensions industry to absorb the new swathe of regulation that would be needed to make such further reforms work effectively.
Ros Altmann reportedly said in a ministerial statement: "The market needs time and space to adjust to the other reforms underway and these areas will be revisited once there has been an opportunity for that to happen."
Altmann said the government's priorities were the smooth introduction of the new state pension, set for 6 April next year and the continued roll out of auto-enrolment. This means the new state pension being delivered as smoothly as possible and small and micro employers getting the help and support they need as they meet their automatic enrolment duties. The government and the pensions industry are also currently working through the changes following from the new pension flexibilities which allow scheme members to have more freedom and choice about how and when they withdraw their pension savings.
Related CIPP news
Defined Ambition legislation expected in 2015 - 24 February 2014 Government reforms to stop savers losing mini pension pots - 16 March 2015
NAPF becomes the Pensions and Lifetime Savings Association 22 October 2015
The National Association of Pension Funds (NAPF) has re-branded as the Pensions and Lifetime Savings Association.
Speaking at the recent NAPF Annual Conference & Exhibition in Manchester, Joanne Segars announced the new brand and said:
"The purpose of the Pensions and Lifetime Savings Association is to help everyone achieve a better income in retirement. It will speak for all of the workplace pensions community; look beyond pensions and also speak about lifetime savings; and support savers."
Find out what the The Pensions and Lifetime Savings Association do and why they are changing.
CIPP Policy News Journal
25/04/2016, Page 374 of 453
Made with FlippingBook - Online magazine maker