The UK State Pension is a regular pension payment. The Government provides it, and most people in the UK can claim it when they get to the State Pension age. This type of pension can be a useful add-on to your retirement income. However, you won't receive your State Pension automatically—you will need to claim it. Fortunately, once you reach the minimum age, you should receive a letter that will tell you what to do next.
The April 2016 State Pension Changes
If you made it to the qualifying age before 6 April 2016, the changes will not affect you. This applies for both of these circumstances:
- You were receiving your State Pension before 6 April 2016
- You weren't receiving your State Pension despite qualifying for it before 6 April 2016
The full basic amount you can get per week is £125.95. You'll get this full amount if you have paid 30 years of National Insurance (NI) contributions. If you haven't paid 30 years' worth, you can still get a lesser amount of State Pension each week. If you defer payments, you can increase the amount of pension the Government eventually pays you after the end of the deferring period. That sounds a little complicated, but it's simple. For example, you have two options:
- Put off receiving your weekly payments for at least one year, and you will get a lump sum payment. Warning, this lump sum is taxable.
- If you defer payments for five weeks, you earn a pension increase of 1%. If you were to do this for a year, you'd get a 10.4% rise on your pension when you eventually take payments again.
You can only defer once, so have a think about how you are going to work around deferred payments for a long period and plan ahead.
What About if I Reach State Pension Age on or After 6 April 2016?
And now for the new system. Okay, if you're a woman born on or after 6 April 1953, you will receive the new State Pension entitlement. The full amount is £164.35 per week. You need a whopping 35 years of National Insurance (NI) contributions ‘under your belt’ to qualify for the full amount. If you have less than 35 years, but at least 10 years, good news—you’ll get State Pension still, just a lower amount. Those 10 years don’t have to be consecutive, either, which is handy. Moreover, they can be from before or after 6 April 2016. Okay, now if you’re a man you’re asking, “What is the maximum State Pension for me?” Well, it’s also £164.35 per week, if you were born after 6 April 1951. Just like women, you need 35 years of NI contributions for the full amount. And for lesser amounts, at least 10 non-consecutive years.
Can I Defer if I'm in the New System?
Yes, you can. If you defer, you'll receive extra pension funds when you finally claim it. For every nine weeks you defer, you'll get a pension increase of 1%. Across a year, this adds up to 5.8%.
Can I Carry on Working Even Though I'm Receiving My State Pension?
The forced retirement age of old (65) is no more. You can happily keep working once you're getting your State Pension. What you earn from working won't affect this pension, but it could affect other benefits that you might otherwise have an entitlement to, such as Pension Credit or Housing Benefit.
Is There Anything Else I Need to Know?
You can't claim a pension based on the contributions of your spouse or civil partner in most cases. There are certain exceptions, though. If you don't have the minimum qualifying years for a full State Pension, you might be able to make up the gaps in your National Insurance contributions by paying voluntary contributions. There's a limited time to do this. Finally, under the new system, contracting out no longer exists. What this means is that if you've had a workplace, personal, or stakeholder pension and you paid reduced National Insurance contributions, your starting amount for your State Pension might be lower than the full amount.
Talk to an Expert
If you have any questions about pensions, contact our employment law experts on 0808 145 3382.
Find Out More About Pensions
Learn more about pensions with our guides, including this one on pension auto enrolment.
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