UK State Pension

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The Basic State Pension (formerly the Retirement Pension), is part of the United Kingdom Government pension arrangement, alongside the Graduated Retirement Benefit and State Earnings-Related Pension Scheme (now State Second Pension).

Contents

[edit] Background

The State Pension is a "contribution-based" benefit, and depends on an individual's National Insurance (NI) contribution history. For someone with the 30 qualifying years (years in which NI contributions were paid) [1], it is payable at a flat rate of £102.15 a week (2011:2012). A smaller, pro-rata, pension is paid to someone with fewer qualifying years. An "age addition" of 25p a week is paid to people over 80.

The table shows how the basic state pension for single people and married couples has been changed between 1980 and 2011 and the inflation adjusted figure for the current year. (Strictly speaking, there is no "married couple" State pension - the amount shown is the sum of the full-rate "category A" pension payable to an individual and the full-rate "category B" pension payble to a spouse who is not entitled to any "category A" pension in their own right. See below.)

Year Single person Married couple CPI adjusted single CPI adjusted couple
1980-1 £27.15 £43.45 £86.77 £138.86
1985-6 £38.30 £61.30 £86.50 £138.44
1990-1 £46.90 £75.10 £79.47 £127.26
1995-6 £58.85 £94.10 £87.63 £134.85
2000–1 £67.50 £107.90 £84.69 £135.38
2001–2 £72.50 £115.90 £89.39 £142.90
2002–3 £75.50 £120.70 £91.56 £146.37
2003–4 £77.45 £123.80 £91.28 £145.91
2004–5 £79.60 £127.25 £91.10 £145.64
2005–6 £82.05 £131.20 £91.31 £146.00
2006–7 £84.25 £134.75 £90.87 £145.34
2007–8 £87.30 £139.60 £90.29 £144.38
2008–9 £90.70 £145.05 £90.23 £144.29
2009-10 £95.25 £152.30 £95.25 £152.30
2010-11 £97.65 £156.15 £97.65 £156.15
2011-12 £102.15 £163.35 £102.15 £163.35


The Basic State Pension is increased in April each year to pensioners living in the UK and in certain overseas countries which have a Social Security Agreement with the UK that includes British pension uprating.[2] Pensioners living in other oversea countries without a current agreement have their pensions frozen at the rate at which they were when they left the UK.

[edit] State Pension age

The state pension age (SPA) is presently 65 for men. Under the Pensions Act 1995, the SPA for women is in the throes of being increased from 60 to 65. Under the Pensions Act 2007, the SPA for both men and women will be raised from 65 to 68 in three steps starting in 2024. Details are as follows.

[edit] Women born between 1950 and 1955

date of birth from to date of reaching SPA
5 April 1950 age 60
6 Apr 1950 5 May 1950 6 May 2010
6 May 1950 5 Jun 1950 6 Jul 2010
6 Jun 1950 5 Jul 1950 6 Sep 2010
6 Jul 1950 5 Aug 1950 6 Nov 2010
6 Aug 1950 5 Sep 1950 6 Jan 2011
6 Sep 1950 5 Oct 1950 6 Mar 2011
6 Oct 1950 5 Nov 1950 6 May 2011
6 Nov 1950 5 Dec 1950 6 Jul 2011
6 Dec 1950 5 Jan 1951 6 Sep 2011
6 Jan 1951 5 Feb 1951 6 Nov 2011
6 Feb 1951 5 Mar 1951 6 Jan 2012
6 Mar 1951 5 Apr 1951 6 Mar 2012
6 Apr 1951 5 May 1951 6 May 2012
6 May 1951 5 Jun 1951 6 Jul 2012
6 Jun 1951 5 Jul 1951 6 Sep 2012
6 Jul 1951 5 Aug 1951 6 Nov 2012
6 Aug 1951 5 Sep 1951 6 Jan 2013
6 Sep 1951 5 Oct 1951 6 Mar 2013
6 Oct 1951 5 Nov 1951 6 May 2013
6 Nov 1951 5 Dec 1951 6 Jul 2013
6 Dec 1951 5 Jan 1952 6 Sep 2013
6 Jan 1952 5 Feb 1952 6 Nov 2013
6 Feb 1952 5 Mar 1952 6 Jan 2014
6 Mar 1952 5 Apr 1952 6 Mar 2014
6 Apr 1952 5 May 1952 6 May 2014
6 May 1952 5 Jun 1952 6 Jul 2014
6 Jun 1952 5 Jul 1952 6 Sep 2014
6 Jul 1952 5 Aug 1952 6 Nov 2014
6 Aug 1952 5 Sep 1952 6 Jan 2015
6 Sep 1952 5 Oct 1952 6 Mar 2015
6 Oct 1952 5 Nov 1952 6 May 2015
6 Nov 1952 5 Dec 1952 6 Jul 2015
6 Dec 1952 5 Jan 1953 6 Sep 2015
6 Jan 1953 5 Feb 1953 6 Nov 2015
6 Feb 1953 5 Mar 1953 6 Jan 2016
6 Mar 1953 5 Apr 1953 6 Mar 2016
6 Apr 1953 5 May 1953 6 May 2016
6 May 1953 5 Jun 1953 6 Jul 2016
6 Jun 1953 5 Jul 1953 6 Sep 2016
6 Jul 1953 5 Aug 1953 6 Nov 2016
6 Aug 1953 5 Sep 1953 6 Jan 2017
6 Sep 1953 5 Oct 1953 6 Mar 2017
6 Oct 1953 5 Nov 1953 6 May 2017
6 Nov 1953 5 Dec 1953 6 Jul 2017
6 Dec 1953 5 Jan 1954 6 Sep 2017
6 Jan 1954 5 Feb 1954 6 Nov 2017
6 Feb 1954 5 Mar 1954 6 Jan 2018
6 Mar 1954 5 Apr 1954 6 Mar 2018
6 Apr 1954 5 May 1954 6 May 2018
6 May 1954 5 Jun 1954 6 Jul 2018
6 Jun 1954 5 Jul 1954 6 Sep 2018
6 Jul 1954 5 Aug 1954 6 Nov 2018
6 Aug 1954 5 Sep 1954 6 Jan 2019
6 Sep 1954 5 Oct 1954 6 Mar 2019
6 Oct 1954 5 Nov 1954 6 May 2019
6 Nov 1954 5 Dec 1954 6 Jul 2019
6 Dec 1954 5 Jan 1955 6 Sep 2019
6 Jan 1955 5 Feb 1955 6 Nov 2019
6 Feb 1955 5 Mar 1955 6 Jan 2020
6 Mar 1955 5 Apr 1955 6 Mar 2020
6 Apr 1955 age 65

[edit] Men and women born between 1959 and 1978

date of birth from to date of reaching SPA
5 Apr 1959 age 65
6 Apr 1959 5 May 1959 6 May 2024
6 May 1959 5 Jun 1959 6 Jul 2024
6 Jun 1959 5 Jul 1959 6 Sep 2024
6 Jul 1959 5 Aug 1959 6 Nov 2024
6 Aug 1959 5 Sep 1959 6 Jan 2025
6 Sep 1959 5 Oct 1959 6 Mar 2025
6 Oct 1959 5 Nov 1959 6 May 2025
6 Nov 1959 5 Dec 1959 6 Jul 2025
6 Dec 1959 5 Jan 1960 6 Sep 2025
6 Jan 1960 5 Feb 1960 6 Nov 2025
6 Feb 1960 5 Mar 1960 6 Jan 2026
6 Mar 1960 5 Apr 1960 6 Mar 2026
6 Apr 1960 5 Apr 1968 age 66
6 Apr 1968 5 May 1968 6 May 2034
6 May 1968 5 Jun 1968 6 Jul 2034
6 Jun 1968 5 Jul 1968 6 Sep 2034
6 Jul 1968 5 Aug 1968 6 Nov 2034
6 Aug 1968 5 Sep 1968 6 Jan 2035
6 Sep 1968 5 Oct 1968 6 Mar 2035
6 Oct 1968 5 Nov 1968 6 May 2035
6 Nov 1968 5 Dec 1968 6 Jul 2035
6 Dec 1968 5 Jan 1969 6 Sep 2035
6 Jan 1969 5 Feb 1969 6 Nov 2035
6 Feb 1969 5 Mar 1969 6 Jan 2036
6 Mar 1969 5 Apr 1969 6 Mar 2036
6 Apr 1969 5 Apr 1977 age 67
6 Apr 1977 5 May 1977 6 May 2044
6 May 1977 5 Jun 1977 6 Jul 2044
6 Jun 1977 5 Jul 1977 6 Sep 2044
6 Jul 1977 5 Aug 1977 6 Nov 2044
6 Aug 1977 5 Sep 1977 6 Jan 2045
6 Sep 1977 5 Oct 1977 6 Mar 2045
6 Oct 1977 5 Nov 1977 6 May 2045
6 Nov 1977 5 Dec 1977 6 Jul 2045
6 Dec 1977 5 Jan 1978 6 Sep 2045
6 Jan 1978 5 Feb 1978 6 Nov 2045
6 Feb 1978 5 Mar 1978 6 Jan 2046
6 Mar 1978 5 Apr 1978 6 Mar 2046
6 Apr 1978 age 68

[edit] Effect of Pensions Act 2011

The Pensions Act 2011 will accelerate the rise in SPA to 66 for both men and women to 6 October 2020. Details of are as follows.

date of birth from to men previous law men new law women previous law women new law
6 Apr 1953 5 May 1953 age 65 age 65 6 May 2016 6 Jul 2016
6 May 1953 5 Jun 1953 age 65 age 65 6 Jul 2016 6 Nov 2016
6 Jun 1953 5 Jul 1953 age 65 age 65 6 Sep 2016 6 Mar 2017
6 Jul 1953 5 Aug 1953 age 65 age 65 6 Nov 2016 6 Jul 2017
6 Aug 1953 5 Sep 1953 age 65 age 65 6 Jan 2017 6 Nov 2017
6 Sep 1953 5 Oct 1953 age 65 age 65 6 Mar 2017 6 Mar 2018
6 Oct 1953 5 Nov 1953 age 65 age 65 6 May 2017 6 Jul 2018
6 Nov 1953 5 Dec 1953 age 65 age 65 6 Jul 2017 6 Nov 2018
6 Dec 1953 5 Jan 1954 age 65 6 Mar 2019 6 Sep 2017 6 Mar 2019
6 Jan 1954 5 Feb 1954 age 65 6 May 2019 6 Nov 2017 6 May 2019
6 Feb 1954 5 Mar 1954 age 65 6 Jul 2019 6 Jan 2018 6 Jul 2019
6 Mar 1954 5 Apr 1954 age 65 6 Sep 2019 6 Mar 2018 6 Sep 2019
6 Apr 1954 5 May 1954 age 65 6 Nov 2019 6 May 2018 6 Nov 2019
6 May 1954 5 Jun 1954 age 65 6 Jan 2020 6 Jul 2018 6 Jan 2020
6 Jun 1954 5 Jul 1954 age 65 6 Mar 2020 6 Sep 2018 6 Mar 2020
6 Jul 1954 5 Aug 1954 age 65 6 May 2020 6 Nov 2018 6 May 2020
6 Aug 1954 5 Sep 1954 age 65 6 Jul 2020 6 Jan 2019 6 Jul 2020
6 Sep 1954 5 Oct 1954 age 65 6 Sep 2020 6 Mar 2019 6 Sep 2020
6 Oct 1954 5 Nov 1954 age 65 age 66 6 May 2019 age 66
6 Nov 1954 5 Dec 1954 age 65 age 66 6 Jul 2019 age 66
6 Dec 1954 5 Jan 1955 age 65 age 66 6 Sep 2019 age 66
6 Jan 1955 5 Feb 1955 age 65 age 66 6 Nov 2019 age 66
6 Feb 1955 5 Mar 1955 age 65 age 66 6 Jan 2020 age 66
6 Mar 1955 5 Apr 1954 age 65 age 66 6 Mar 2020 age 66
6 Apr 1955 5 Apr 1959 age 65 age 66 age 65 age 66
6 Apr 1959 5 May 1959 6 May 2024 age 66 6 May 2024 age 66
6 May 1959 5 Jun 1959 6 Jul 2024 age 66 6 Jul 2024 age 66
6 Jun 1959 5 Jul 1959 6 Sep 2024 age 66 6 Sep 2024 age 66
6 Jul 1959 5 Aug 1959 6 Nov 2024 age 66 6 Nov 2024 age 66
6 Aug 1959 5 Sep 1959 6 Jan 2025 age 66 6 Jan 2025 age 66
6 Sep 1959 5 Oct 1959 6 Mar 2025 age 66 6 Mar 2025 age 66
6 Oct 1959 5 Nov 1959 6 May 2025 age 66 6 May 2025 age 66
6 Nov 1959 5 Dec 1959 6 Jul 2025 age 66 6 Jul 2025 age 66
6 Dec 1959 5 Jan 1960 6 Sep 2025 age 66 6 Sep 2025 age 66
6 Jan 1960 5 Feb 1960 6 Nov 2025 age 66 6 Nov 2025 age 66
6 Feb 1960 5 Mar 1960 6 Jan 2026 age 66 6 Jan 2026 age 66
6 Mar 1960 5 Apr 1960 6 Mar 2026 age 66 6 Mar 2026 age 66

[edit] Proposed changes to State Pension age for people born between 1960 and 1969

The Government announced on 29 November 2011 that it proposed to bring forward the rise in State Pension age to 67 for both men and women to 6 April 2028. This will mean that people born after 5 April 1961 but before 6 April 1969 will have a State Pension age of 67. People born after 5 April 1960 but before 6 April 1961 will reach State Pension age between 66 and 67, as shown in the table below.

Under the Pensions Act 2007, people born after 5 April 1969 but before 6 April 1977 already have a State Pension age of 67. For people born after 5 April 1968 but before 6 April 1969, their State Pension age would have been between 66 and 67. Under the proposal these people will now have a State Pension age of 67.

date of birth from to proposed date of reaching SPA
6 Apr 1960 5 May 1960 6 May 2026
6 May 1960 5 Jun 1960 6 Jul 2026
6 Jun 1960 5 Jul 1960 6 Sep 2026
6 Jul 1960 5 Aug 1960 6 Nov 2026
6 Aug 1960 5 Sep 1960 6 Jan 2027
6 Sep 1960 5 Oct 1960 6 Mar 2027
6 Oct 1960 5 Nov 1960 6 May 2027
6 Nov 1960 5 Dec 1960 6 Jul 2027
6 Dec 1960 5 Jan 1961 6 Sep 2027
6 Jan 1961 5 Feb 1961 6 Nov 2027
6 Feb 1961 5 Mar 1961 6 Jan 2028
6 Mar 1961 5 Apr 1961 6 Mar 2028
6 Apr 1961 5 Apr 1977 age 67


[edit] Postponement

It is possible to postpone claiming a State pension at SPA. Postponed pensions are increased by 1 per cent for every five weeks that the pension is not claimed (approximately 10.4 per cent a year). Alternatively pensioners who have postponed their pension can claim a lump sum and an unenhanced pension. The lump sum is the amount of pension payments foregone plus interest at 2 per cent a year over the Bank of England base rate.

[edit] Calculations

The Basic State Pension is based on the National Insurance record of the individual (this is called a Category A pension).

Each year that National Insurance was paid is called a qualifying year. For 2011:2012 to be a qualifying year you need to earn at least £5304 if you are an employee, or £5315 if you are self-employed, and have paid (or been credited with) National Insurance contributions based on these earnings. For all those born after 5 April 1945 you need 30 qualifying years for a full-rate Basic State Pension, with a single qualifying year required to get any State Pension. For those born before 6 April 1945 a man needed 44 qualifying years for a full Basic State Pension and a woman needed 39 years. To get any State Pension an individual required 25 per cent of the qualifying years they needed for a full-rate pension.

Individuals with less than a full record of qualifying years, may elect to pay voluntary National Insurance contributions, in order to boost their record for pension purposes.[3]

People in certain circumstances, such as caring for a severely disabled person for more than 20 hours a week or claiming unemployment or sickness benefits, gain National Insurance credits.[4]

The amount of the Basic State Pension that you actually receive is calculated by multiplying the full rate by the number of your qualifying years and dividing by the number of years needed for the full rate.

If you paid NI contributions between April 1961 and April 1975 you would have earned a small Graduated Retirement pension.

If you paid NI contributions between April 1978 and April 2002 you would have earned an additional pension from the State Earnings Related Pension Scheme, although this will be very small if you were "contracted out" of this arrangement. Since April 2002 NI contributions have earned an additional State Second Pension.

[edit] Married couples

A wife or husband can claim extra Basic State Pension based on the National Insurance contributions paid by his or her husband or wife (this extra is called a Category B pension).

If one spouse has a Category A Basic State Pension of less than sixty percent of the full Basic State Pension, then when he or she reaches State Pension Age, he or she is able to have his or her Basic State Pension topped-up to 60 per cent of his or her spouse's Category A Basic State Pension without the other spouse losing anything from his or her record.

Men, born before 6. April 1945, are not able to claim a Category B pension based on their wives' contribution record. However husbands and civil partners who reach State Pension Age on or after 6 April 2010 are able to claim a Category B pension on the same basis as wives.

[edit] Top-up pensions

Married women with young children and carers obtained credits of NI contributions by making a claim.[5]

Pensioners with low incomes can claim Pension Credit.[6] A person who receives a Pension Credit can also receive free dental care and help with the cost of spectacles and sight testing. All persons over State pension age receive free medical prescriptions. Means-tested benefits often qualify a claimant for the full amount of Local Authority benefits such as Housing Benefit and Council Tax Benefit.

[edit] Pensions Act 2007

A new approach was introduced following the findings of the all-party Pensions Commission in 2006 and the white paper Security in retirement: towards a new pension system[7] published in May 2006. The key provisions were:[8]

  1. Reduction of the qualifying years for a full basic State Pension from 44 years for men and 39 years for women to 30 years for both.
  2. The basic State Pension is now increased every year by the greatest of:

•the growth in average earnings; •the growth in prices; •2.5 per cent.

  1. The contribution conditions for basic State Pension were changed so that it is easier for everyone to build up some entitlement.
  2. Replacing Home Responsibility Protection (HRP) with a new system of weekly credits for parents and carers.
  3. Raising the State Pension Age for both women and men from 65 to 68 in three stages between 2024 and 2046.
  4. Introducing National Insurance credits for parents and carers so that they can build up some entitlement to the Additional State Pension.
  5. End of the option to contract out of the Additional State Pension through money-purchase private pensions.

Some modifications to this were made in the Pensions Act 2008.

[edit] Future flat-rate Pensions

The Coalition Government has proposed that the earnings-related Second State pension be replaced by a flat-rate pension which is not based on earnings. A green paper was issued in April 2011. [9].

It was also proposed that various rules regarding marriage, divorce and bereavement be phased out. This would mean that Category B pensions (see above) would be replaced by Category A pensions for everyone. [9]

[edit] See also

[edit] Notes

  1. ^ How many qualifying years do I need?
  2. ^ Social Security Agreement Countries, dwp.gov.uk/
  3. ^ Application to pay voluntary National Insurance contributions
  4. ^ Understanding the basic State Pension http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/Basicstatepension/DG_10014671
  5. ^ Home Responsibilities Protection, http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Caringforsomeone/DG_10018691 
  6. ^ About Pension Credit, Department of Work and Pensions, http://www.dwp.gov.uk/pension-credit-toolkit/about-pension-credit/, retrieved 2011-04-25 
  7. ^ Security in retirement: towards a new pension system, http://www.dwp.gov.uk/docs/white-paper-complete.pdf, retrieved 2011-04-25 
  8. ^ The Pensions Act 2007, Department for Work and Pensions, http://www.dwp.gov.uk/policy/pensions-reform/the-pensions-act-2007/, retrieved 2011-04-25 
  9. ^ a b A State Pension for the 21. Century, DWP Consultation, dwp.gov.uk, accessed 15. April 2011

[edit] External links

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