State Pension (United Kingdom)

The basic State Pension (alongside the Graduated Retirement Benefit, the State Earnings-Related Pension Scheme, and the State Second Pension) is payable to men born before 6 April 1951, and to women born before 6 April 1953. The maximum amount payable is £141.85 a week (April 2022 - April 2023).[1]

The new State Pension is payable to men born on or after 6 April 1951, and to women born on or after 6 April 1953. The maximum amount payable is £203.85 a week (April 2023 - April 2024).[2] In September 2023 it was announced that the new State Pension is expected to rise by 8.5% to £221.20 per week from April 2024 in line with triple lock calculations for the year.[3]

The State Pension is a 'contribution-based' benefit, and depends on an individual's National Insurance (NI) contribution history. To qualify for a full pension (amounts given above), an individual would require:

• basic State Pension: 30 qualifying years (years in which NI contributions were paid) for contributors claiming between 6 April 2010 and 5 April 2016;[4][5][6]
• new State Pension: 35 qualifying years (years in which NI contributions were paid) for customers claiming from 6 April 2016.[7]

In years where fewer than 52 weeks' NI were paid, the year is disregarded. With fewer qualifying years smaller, pro-rata, pension is paid. People who were contracted-out paid lower NI contributions will receive a lower state pension.

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,[8] in line with the CPI. All state pensions for these pensions are protected by the "triple lock" guarantee introduced by the 2010–2015 coalition government, meaning that the pension rises each year by either the annual price inflation, or average earnings growth, or a guaranteed 2.5% minimum, whichever is the greatest. Coming into effect each April, the uprating is based on the previous September's CPI inflation, along with the annual increase in weekly earnings averaged over May to July.[9] The triple Lock has been replaced for one year for the 2022 increase with a double lock with the average earnings element removed. This was because the government believed there was a statistical anomaly due to Covid having depressed the 2020 earnings figures.[10]

Pensioners living in other countries without a current agreement (which includes most Commonwealth countries) have their pensions frozen at the rate in effect on the date when they left the UK, or on the date when they applied for a pension, whichever is later.[11]

It is possible to defer claiming a State Pension at SPA.[20]

For individuals who reached SPA before 6 April 2016, deferred pensions are increased by 1% for every 5 weeks that the pension is not claimed (approximately 10.4% per year). Alternatively pensioners who have deferred 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 year over the Bank of England base rate.

For individuals who reach SPA on or after 6 April 2016, deferred pensions are increased by 1% for every 9 weeks that the pension is not claimed (approximately 5.8% per year).

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 a woman has a Category A basic State Pension of less than 60 per cent of the full basic State Pension, then when she reaches her State Pension Age, she will have her basic State Pension topped-up to 60 per cent of her husband's Category A basic State Pension, once her husband reaches pension age.

Men, born after 5 April 1945, are able to claim a Category B pension based on their wives' contribution record. Similarly, 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.

The government originally proposed that in April 2017 the basic State Pension and Second State Pension should both be replaced by a single, flat-rate pension. A green paper was issued in April 2011,[27] followed by a White Paper in January 2013.[28] The amount of an individual's flat-rate pension would depend on the number of qualifying years, with 35 qualifying years being needed for the maximum pension and pro-rata amounts for fewer qualifying years, subject to a minimum of about eight years. Rights already earned to a Second State Pension would not be lost. In the 2013 budget it was announced that introduction of the single tier pension will be brought forward by one year to 6 April 2016.[29]

The new "single-tier" State Pension would be worth £144 a week (in 2012-13 terms). Provided they have 35 qualifying years, individuals would actually receive £144 a week, plus a "protected amount" if they have already earned a second State pension greater than £37 a week (which is the difference between the current basic State Pension and the proposed flat-rate pension), and minus a "rebate-derived amount" if they have paid smaller National Insurance contributions because they were "contracted out" of the Second State Pension Scheme (or its predecessor, the State Earnings Related Pension Scheme).[28]

The new, single-tier State Pension would eventually remove the need for Pension Credit. It is also proposed that various rules regarding marriage, divorce and bereavement would be phased out. This would mean that Category B pensions (see above) would be replaced by Category A pensions for everyone, although any rights to a Category B pension that existed at the implementation date would be preserved.[27]

These changes are now law, they were enacted by the Pensions Act 2014 which received royal assent on 14 May 2014.[30]