Yet Another Blow to Pension Planning

Written by Karen Bryan

RetirementI’m livid that the Government is about to announce yet another detrimental change in UK pensions. The Government have been working on a their proposal for a new simpler state pension. Currently you need to have paid 30 years of National Insurance Contributions (NICs) in order to qualify for the full state pension. This morning, I read on the BBC news site that this threshold is to rise to 35 years.

By April 2012 I’d paid 28 year of NICs. As I can access my stakeholder pension once I’m 55 (April 2014), I thought if I decided to work less from next April that it wouldn’t matter if my earned income fell below the NIC threshold, as my full state pension was already secured by the 30 years of NICs I’d have paid by then. But oh no, that won’t be the case.

My husband is an early retiree who has paid 25 years of NICs. We thought it’d probably be a good idea for him to pay the five years voluntary NICs if he hadn’t worked and paid NICs for at least five years by the time he was 66. Last year I estimated that five years of NICS would cost him £3,130. Well, we can now double that figure.

This exemplifies that it’s impossible to plan retirement.

I’ve already been caught up in two changes to the age at which I can draw my state pension, first the equalisation for women to age 65, and then again in the next change up to age 66. Last year annuity rates fell by an average of 11.5%, so the guaranteed income that  my personal pension can buy in shrinking at an alarming rate.

Until today, I believed that my full UK state pension was sorted (as long as the UK Government doesn’t decide to start means testing the UK state pension). Looks like any thoughts of me being able to retire early are heading out the window.