The Pensions Act 2007

Reform of the pension’s landscape

The Pensions Act 2007 put into law the reforms to the state pension system set out in the White Paper, Security in retirement: towards a new pension system that was published in May 2006. These reforms to the state pensions system covered the Basic State Pension and the State Second Pension.

The Act only applies to Great Britain but it is intended that Northern Ireland, which has its own pension’s legislation, will make corresponding provision for its customers in due course.

Key changes

Basic State Pension (BSP)

  • from 2010 the number of qualifying years needed to receive a full BSP will reduce from 39 for women and 44 for men to 30 years for both
  • linking annual cost of living increases in BSP with earnings rather than prices.(subject to affordability and the fiscal position this will start in 2012 but, in any case, by the end of the next Parliament at the latest)
  • changing the contribution conditions for BSP so that it is easier for everyone to build up some entitlement
  • replacing Home Responsibilities Protection (HRP) with a new system of weekly credits for those caring for children up to the age of 12 and for those who spend at least 20 hours a week caring for severely disabled people;

State Second Pension (S2P)

  • from 2010 there will be national insurance credits for those with long-term disabilities and people with caring responsibilities so that they can build up some additional pension entitlement.  

State Pension Age

  • the state pension age will gradually increase between 2024 and 2046, to 68 for both men and women to reflect increasing longevity in society and make the state pension affordable in the long term.
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