State Pension
Many people are unsure about if and how they will qualify for a state pension and, due to ever changing dates, are uncertain as to when they will receive it. I have tried to explain in simple terms how the state pension works and if you can expect one upon retirement or if not what you can do.
Qualifying
The State Pension is paid to individuals by the government upon retirement. It is a secure income for life which increases by at least the rate of inflation each year. However, not everyone is entitled to the full State Pension, as you build up your entitlement by making National Insurance contributions during your working life.
In order to qualify for the full amount, you must have worked in the UK, have reached state pension age and made National Insurance contributions for 35 years. If you aren't in work, or have worked abroad, you have the option of either paying voluntary National Insurance or be credited with them from the government.
You will also receive National Insurance credits if:
you have been out of work because of illness, unemployment or maternity leave
you have stayed at home to raise a child and registered for child benefit. You will receive credits for every year you bring up your children, up until your youngest child’s 12th birthday
you are a carer for someone sick or disabled, or a foster carer, or received Carer's Allowance
you are in work, but don't earn enough to pay National Insurance
When?
With life expectancy increasing, the government is having to pay the state pension for longer, and to more people. Therefore, in order to accommodate this greater draw on government revenue, the state pension age is gradually going up.
By November 2018, it will be 65 for both men and women, increasing to 66 in October 2020 and to 67 in 2028.
The intention is to then increase the state pension age from 67 to 68 between 2037 and 2030. This means that those born between April 1970 and April 1978 can expect their state pension age to be 68 and not 67. However, this this has not yet been approved by parliament, so may be subject to change.
How much?
From April 2016 a new flat-rate State Pension was introduced. For the current tax year, 2018-19, the full new State Pension is £164.35 per week. However, you might be entitled to more than this if you built up an entitlement to ‘additional state pension’ under the old pre-April 2016 system – or less than this if you were ‘contracted out’ of the additional state pension.
You’ll usually need at least 10 qualifying years on your national insurance record to qualify for any State Pension.
How it’s paid
The new State Pension is 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).
Interesting Fact!
The day your pension is paid depends on your National Insurance number.
Last 2 digits of your National Insurance number
Payment day of the week
00 to 19 – Monday
20 to 39 – Tuesday
40 to 59 – Wednesday
60 to 79 – Thursday
80 to 99 – Friday
I hope that this is helpful without being complicated but if you would like any more information then please do contact BFP.
