The state pension is being revised and the self-employed are to
benefit...
Pension revisions are currently being made to the state pension
that will be of real benefit to freelancers. Those
individuals who don't have full NI records or those without the
right to a state pension are to be treated in a much fairer
fashion. The revisions are to be effected from 2015.
The 'means-testing' system currently used to qualify an
individual's state pension tends to be reduced significantly in the
case of the self-employed, in proportion to their income received
privately. If you are a fairly low earner and have therefore
made low NI contributions, your state pension would be reduced
taking this account. With the 'means-testing' method
abolished and the proposed 'flat rate' system introduced, this will
signify a much fairer and simpler method. It will certainly
alter the self-employed individual's retirement fund for the
better!
The proposal for the flat rate system means that self-employed
individuals will get an additional £4.66 every week for every year
of NIC's they make up, for up to 30 years. Another plus
side to the new approach is the simplicity of it which brings with
it less administration.
It is great to see that the self-employed are being treated
fairly when it comes to pensions. At the end of the day
though, will the increase be enough. Will the standard state
pension be enough for anyone in today's society? The age in
which people are able to retire certainly seems to be getting
older. It's definitely worth reviewing your pension
arrangements regularly and planning ahead for your retirement,
particularly if you plan to make the most of retired life!