The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald

The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.

Regular readers of the personal finance pages of our national newspapers might be wondering ‘what’s occurring’ with the State Pension.
Figures from the Department for Work and Pensions have revealed that most people retiring after the New State Pension comes into effect next year would be better off under the current system.
Almost 500,000 State Pension statements were issued between September 2014 and October 2015.
These statements compare what level of State Pension applicants would have received under both the current State Pension system and the New State Pension, giving them the higher figure as their starting amount.
According to the Department for Work and Pensions (DWP), a whopping 80% of those statements were based on the current system, meaning that they would be better off with the current State Pension arrangement than they would be after reform.
So, as Nessa might say, ‘what’s occurring’?
At the moment, the basic State Pension stands as a maximum of £115.95 a week, with various additions based on your lifetime's earnings.
From April 2016, it is to be replaced by a 'flat rate' State Pension.
In theory, anyone who has made 35 years of National Insurance contributions will qualify for the full payment of around £155 a week, but in practice many will be missing years due to being 'contracted out' as a result of taking part in certain workplace pension schemes.
Even the Government’s Pensions Minister has admitted that the changes have not been properly explained.
According to figures from earlier this year, two-thirds of those reaching pension age next year will not qualify for the full New State Pension.
So, who will get the new State Pension?
The new State Pension scheme is being introduced for people who reach State Pension age on or after 6 April 2016.
You’ll be able to claim the new State Pension if you’re:

• a man born on or after 6 April 1951 
• a woman born on or after 6 April 1953 

If you were born before these dates, you’ll get your State Pension under the current scheme instead.
How much you’ll get when you reach State Pension age will depend on your National Insurance record.
You can find out how much State Pension you may get by getting a State Pension statement.
The full new State Pension will be around £155 a week.
You’ll usually need at least 10 qualifying years on your National Insurance record to get any State Pension under the new scheme.
The amount you get can be higher or lower than the full new State Pension, depending on your National Insurance record.
You may be able to increase the amount of State Pension you’ll get by -

• continuing to pay National Insurance for the years you work until you reach State Pension age 
• applying for National Insurance credits 
• paying voluntary National Insurance contributions 

If you’ve been contracted out . . .
The Additional State Pension ends on 6 April 2016. Any contributions you made before then will contribute to your ‘starting amount’ when your State Pension is calculated.
You may have been contracted out of the Additional State Pension for some or all of your working life.
This means you’ve paid less National Insurance, or some of your contributions have been used to pay into a private pension instead of the Additional State Pension.
Your new State Pension starting amount will be affected by any time you’ve been contracted-out.
But what about the new State Pension through your spouse or civil partner?
The amount you’ll get will be based on your National Insurance record only, unless:

• you’re widowed and eligible to inherit some of your partner’s State Pension 
• you’ve paid married women’s and widows’ reduced rate contributions 
• you’re divorced and affected by a pension sharing order 

Your new State Pension is based on your National Insurance record when you reach State Pension age.
You’ll usually need to have 10 qualifying years on your National Insurance record to get any new State Pension.
You may get National Insurance credits if you can’t work - eg because of illness or disability, you’re a carer or if you’re unemployed.
For example if you:

• claim Child Benefit for a child under 12 (or under 16 before 2010) 
• get Jobseeker’s allowance or Employment and Support Allowance 
• get Carer’s Allowance 

You can have gaps in your National Insurance record and still get the full new State Pension.

You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business
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