The UK state pension is changing and if you are a man born on or after 6th April 1951 or a woman born on or after 6th April 1953 who qualifies, then you will be affected.
The new State Pension comes into effect from 6th April 2016 and will start at a maximum of GBP155.65 per week.
If you have 10 years of relevant UK National Insurance Contributions then you qualify.
To find out how many years you currently have, contact the Future Pension Centre in Newcastle (+44 191 218 36 00).
How do I get the maximum pension?
To get the maximum state pension, you need to have 35 years of qualifying UK National Insurance Contributions.
Every year less than this will reduce your weekly pension by GBP4.45 (155.65/35).
What happens if I contracted out?
Your pension might be lower if you were previously contracted out.
Being contracted out means paying lower National Insurance Contributions and having the money paid into another form of pension instead, e.g. a final salary pension scheme at work or a workplace, personal or stakeholder pension (prior to 6th April 2012).
If you worked for a public sector organization (e.g. NHS) this is likely to have been the case.
What happens if I have lived overseas?
The new UK State Pension is only based on UK National Insurance Contributions.
However, you may be able to use your time abroad to make up the 10 qualifying years you need to get any new State Pension. This is most likely if you have lived or worked in:
- a country in the European Economic Area
- certain countries that have a social security agreement with the UK
As an example, say you have 5 years of qualifying UK National Insurance Contributions and have also worked in Poland (a country in the European Economic Area) for 7 years.
Assuming you had paid into the Polish state pension system for that time, then you would then meet the minimum number of qualifying years (5+7).
Your actual pension income would only be based on the 5 years you spent in the UK though.
When can I start receiving State Pension?
The current State Pension age is 65 for men born before 6 December 1953 and between 60 and 65 for women born after 5 April 1950 and before 6 December 1953.
This is changing though. Going forward, State Pension age will increase to:
- 66 for men and women retiring in 2020
- 67 for men and women retiring in 2028
- 68 for men and women retiring in 2046
How is the New State Pension taxed?
If you are living in the UK, you’ll pay tax at whatever your marginal rate of tax happens to be.
If you are non UK resident, you wouldn’t normally pay UK tax on your State Pension. However, you might be liable for tax on it in the county in which you are resident.