How the government changes to pension rules could affect you

On 6 April this year, several changes were introduced by the Department for Work and Pensions aimed at helping women, carers and low earners in retirement, but it was not good news for everyone.


One of the most significant changes is the increased minimum age for drawing a pension. From 6 April, the minimum pension age increased to age 55, affecting more than four million people who were born between 6 April 1955 and 5 April 1960 who will now have to wait for up to five years to draw their pension.

The state pension age for women also started to rise from 6 April until it reaches 65 in 2020. By 2026, it is set to rise to 66 for everyone, until it ultimately reaches 68 in 2046.

Other changes include a reduction in the National Insurance (NI) contributions required to qualify for the full basic state pension, which increased from £95.25 a week to £97.65 a week from 6 April. Men and women will now need to build up just 30 years of contributions, which the government predicts will allow for an extra 40,000 women who reach pension age in the next tax year to qualify for the full state pension.

The state second pension will also be affected by the reforms and now payments within the upper earnings threshold have been reduced from 20 to 10 per cent. Further down the line, this will be moved to a flat-rate payment rather than an earnings-related pension, and will continue to be linked to inflation, not earnings. A new credits system replaces the Home Responsibilities Protection (HRP) scheme, which is designed to help parents and carers to qualify for the state pension. From 6 April, qualifying years can now be built up through weekly credits. These can then be added on to any paid contributions made when at work, with no limit on the credits awarded, as long as the qualifying rules are met.

For those reaching state pension age after this change takes effect, each complete year of HRP, up to a maximum of 22 years, will be converted into qualifying years for the basic state pension.