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Insight

State Flat-Rate Pension

The Chancellor announced that the new State flat-rate pension will be introduced from 2016.  This is a year earlier than originally planned.  Its introduction will mean the abolition of the State The Chancellor announced that the new State flat-rate pension will be introduced from 2016.  This is a year earlier than originally planned.  Its introduction will mean the abolition of the State Second Pension which, in various guises, has been a feature of the National Insurance system for over 60 years.  Our Pensions team have mentioned to us that bringing in the flat-rate state pension in 2016 means that the complicated National Insurance contracting out rules will also be abolished in 2016. These were introduced in 1978 allowing employers and employees to pay lower National Insurance if they have a good quality pension scheme of their own.  The Department for Work and Pension is still working on ways to mitigate the effect on employers of the increased National Insurance that they will pay from 2016.  HMRC is also reviewing how the voluntary NI system should adapt

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