Do you want to find out further information regarding the UK State Pension? If so, you’ve came to the right place! This section has been created to help the British population understand their financial matters in more detail.
Our money saving team are regularly updating the whole website, with new information, excellent features, hints, tips the latest deals and special offers. If you’re ready to learn more about the UK state pension, let’s begin!
For the current tax year 2018/2019, the new state pension is £164.34 per week. It’s usually paid every 4 weeks into an account of your choice. You’re paid in arrears (for the last 4 weeks, not the coming 4 weeks). However, confusingly there’s two different state pension rules in operation. This is the ‘old’ system and the ‘new’ system. So which one is applicable to you?
- If you were getting the State Pension before 6th April 2016, you’ll continue to receive money under the ‘old’ rules.
- Woman born before 6 April 1953 or a man born before 6 April 1951 will be paid under the old system
- Woman born on or after 6 April 1953 or a man born on or after 6 April 1951 will get the new state pension
Why are there two types?
The UK Government introduced the ‘new’ system on the 6th of April 2016, this was designed to replace the old system. The Government ‘argues’ that the new pension is simpler and over the next few decades, will allow most people to get a higher pension rate.
The change was designed to help woman and people who are self-employed, it’s stated they are likely to ‘benefit’ the most. Some argue that people who are ‘least’ likely to benefit are people in their 20s and 30s, as the one of the main reasons for the change is to potentially save the Government money in the ‘long run’.
For the eligibility requirements, please see below:
- Born on or after 6 April 1951 for men
- Born on or after 6 April 1953 for women
- You’ll usually need at least 10 qualifying years on your National Insurance record to get any State Pension. They don’t have to be 10 qualifying years in a row
- If you’ve lived or worked abroad, you might still be able to get some new State Pension
- You might also qualify if you’ve paid married women’s or widow’s reduced rate contributions
How is the State Pension Calculated?
As previously mentioned, the new state pension is £164.35 per week, the amount you’ll receive will depend on your national insurance record. This obviously can vary from person to person, so please seek further advice if you’re unsure how this applies to you.
Normally your National Insurance record before 6 April 2016 is used to calculate your ‘starting amount’. Generally, your starting amount will include a deduction, if you were ‘contracted out’ of the Additional State Pension. This may have been because you were in a specific type of workplace, have a personal or stakeholder pension.
If you find your starting amount is ‘less’ than £164.35 per week, you can normally get more State Pension by adding more qualifying years to your National Insurance record after 5 April 2016.
You should also be aware that there is annual increases, this generally applies to whichever is highest:
- Earnings – the average percentage growth in wages (in Great England)
- Prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
Inheriting, Separating and Divorce – What Happens Then?
In some case, you may be able to receive an ‘extra payment’ on top of your new state pension if you’re widowed. Usually you don’t inherit if you ‘remarry’ or enter into a new civil partnership before you reach state pension age.
Typically, you’ll only receive inheriting an additional state pension if your relationship with the deceased partner began before the 6th of April 2016 and one of the following rules apply:
- Your partner reached State Pension age before 6 April 2016
- They died before 6 April 2016 but would have reached State Pension age on or after that date
If you think you’re applicable, please get further advice or apply via the Government’s official website. In most cases, should you be accepted, the inherited pension will be paid with your own state pension.
In addition, in some cases if you get divorced or ‘dissolve’ your civil partnership, a court ‘may’ decide to make a ‘pension sharing order’. This means you could get an extra payment on top of your state pension if your ex-partner is ordered to share with you. Equally, your State Pension will be reduced if you’re ordered to share your Additional State Pension or protected payment with your partner.
UK State Pension and Working Overseas
As you can imagine, this can be fairly confusing, so this piece will be written from a ‘general point of view’. If you’ve lived or worked in another country, you’ll typically contribute towards that country’s pension scheme. Of course, this will vary from each individual country, so you may need to do ‘further research’ to see how this affects you.
In some cases, even if you’re eligible for the country’s state pension you’ve lived and worked in, you may also be eligible for a UK state pension too.
Generally, your UK State Pension will be based on your UK National Insurance record. You need 10 years of UK National Insurance contributions to be eligible for the new British State Pension.
For example, let’s say you worked in the UK for 15 years and paid NI contributions, then decided to move abroad and worked in another country for 25 years, equally paying that country’s equivalent of National Insurance. You should ‘in theory’ be eligible for both state pensions.
Though, because this is just an example, you’ll need independent advice as to whether this applies to you.
Remember if you plan to retire in a foreign country, you’ll still be able to claim the new State Pension in most countries throughout the world. This typically includes the European Union, Gibraltar, Switzerland and countries which have a ‘social security agreement’ with the United Kingdom. It’s important to bear in mind, you may have to pay UK tax on your State Pension if you live abroad but are classed as a UK resident for tax purposes.
For further information, please visit the UK Government’s Claiming the State Pension Abroad website.