facebook twitter
0121 514 2293
The Pension Cash Review Experts: Cash In Your Pension Today!


       Information will be secure Privacy Policy and GDPR

    The Future of State Pensions

    Mature couple planning their monthly budget

    With the economy in disarray, the prospects for future pensioners reliant on the state for a retirement income is starting to look quite hazy. The government are making several plans for the future distribution of benefits for those who need them, and making cuts on those who don’t.

    Unfortunately, those who may end up ‘feeling the pinch’ the most could be the older generation, inevitably opening a divide between the young and the elderly.

    With so much confusion around what the Tory policies mean for future pension holders, it would be very useful for those saving or planning to save for a pension to know how exactly things are going to change.

    So, what will the cuts mean for your retirement?

    The New NI Contribution-Based System

    Currently, a flat-rate state pension is up to £110 a week, which, let’s face it, isn’t a lot. For those who retire from a work life that was based on the typical early 20th century ‘breadwinner’ ideology, married partners can claim an additional £66 a week, meaning that a married couple can currently claim roughly £180 a week for themselves from the government.

    However, as of April 2016, this system is set to change. Active pensions will remain unaffected, but anyone retiring after 2016 will need to abide by the new rules.

    Initially, the funding seems more generous, with individuals being able to claim up to £144 a week, which is approximately a 30% increase.


    There is a catch, of course. Anyone who wishes to claim for this pension fund must have at least 35 years of National Insurance (NI) contributions under their belt, as well as a minimum of 7 years full-time employment, meaning that married couples with only one working partners will no longer receive any benefits.

    It could be blamed on the collapse of the nuclear family, but the reality is the government is sourcing its benefits to those who they believe has earned them.

    Because of the Budget Cuts?

    The huge amount of debt that the country is in means that we’ll always see cuts being made, especially when it comes to the benefits system and the National Health Service. As tough as that is, these things are inevitable. Since the government currently spends a massive £80 billion on state pensions, they are a major target for cutbacks.

    At the moment, there is some debate as to where exactly the coalition will strike; it’s between pensioner tax exemption and pensioner benefits. These benefits include free bus travel, free TV licences and the winter fuel allowance, the current budget of which is between £2bn to £3bn a year.

    If the winter fuel allowance is cut off, hundreds of thousands of pensioners will be facing harsh winters. The alternative? Raise their taxes.

    Pensioners using their bus passes

    Some Retirement Tips

    Economists are looking at the statistics and are claiming the solution is that people should just work for longer, to boost their retirement income. But there are alternatives.

    • Find out if your company offers an auto-enrolment pension scheme. Usually, employers will match or even beat any investments you put into your pension pot, so get as many details as you can and see if it can benefit you.
    • Get some part-time work. Even if the pay is low, it can go straight into your pension pot, leaving you free to spend your main income on more immediate costs.
    • You can open a Self-Invested Personal Pension (SIPP) to get a 25% tax relief benefit – for basic-rate taxpayers – on anything you put into your pension pot. SIPPs allow for investments in stocks and shares, which can pay off massively, although be aware that this is a risky strategy.

    What do you think? Let us know in the comments section below.

    Share This Article

    Leave a Reply

    Your email address will not be published. Required fields are marked *