MSV

Pensions

Did you know about the New State Pension?

You can claim your State Pension when you reach State Pension age.  State Pension age is different for men and women (but this is changing) and depends on your date of birth. You can check when you will reach State Pension age on the gov.uk website:

https://www.gov.uk/calculate-state-pension

For those who reach State Pension age from 6th April 2016 onwards there is a new State Pension.

The new rules affect men born on or after 6th April 1951 and women born on or after 6th April 1953.

If you reached State Pension age before 6th April 2016, your State Pension will be calculated based on the old rules.

What are the differences between the old and new State Pension schemes?

Under the old State Retirement Pension scheme rules, your State Pension can be made up of:

  1. a basic State Pension, based on your National Insurance record and
  2. for some people, an earnings-related additional State Pension (also referred to as state second pension or SERPS).

The new State Pension is simpler because it is a flat-rate pension, based on your National Insurance (NI) record alone; not based on earnings.

The number of qualifying years on your NI record you need to get the maximum new State Pension is 35. Under the old scheme you needed 30 years. You need a minimum of 10 qualifying years to be entitled to any new State Pension.

You pay NI contributions when you work and earn over a certain amount and you can be ‘credited’ with NI contributions when you are unemployed, or cannot work due to illness or disability, or you are a carer or you get Child Benefit for a child under 12 (or under 16 before 2010).

The new State Pension is an individual entitlement, this means that in general you will not be able to claim on your spouse or civil partner’s contributions at retirement or if you are widowed or divorced.

For more information on the new State Pension you can visit the gov.uk website: https://www.gov.uk/new-state-pension

I have not reached State Pension age yet - can I find out how much my State Pension might be?

Yes, you can request a State Pension Statement to get an estimate on what you could be entitled to, based on your NI record to date. You can also find out if you have any gaps in your National Insurance record; it is possible to pay voluntary contributions to fill the gaps, but you should get advice to check if it is worth doing this. Or you may be eligible for credits. See the gov.uk webpage for more information. https://www.gov.uk/state-pension-statement

How is the new State Pension calculated?

The full new State Pension (for 35 or more qualifying years) is £159.55 per week in 2017/18. The amount you will be entitled to will be based on the number of qualifying years on your NI record.

So that nobody loses out due to the change, when your entitlement is calculated, there will be a ‘starting amount’ which will be based on your NI record as at 5th April 2016. The Pension Service will work out:

  • the amount you would have been entitled to under the old scheme
  • the amount you would have got if the new scheme had been in place at the start of your working life.

Your ‘starting amount’ will be the higher of these two amounts.

Some people may have a starting amount which is more than the full new State Pension due to the basic and additional pension they have built up. The extra will be paid on top of the full new State Pension and will be protected.

If your starting amount is less than the full new State Pension, you may be able to build up more pension for any qualifying years of contributions or credits between 6th April 2016 and when you reach State Pension age. No further amounts will be added once you reach the full new State Pension amount, or when you reach State Pension age, whichever happens first. 

If you have been ‘contracted out’ of the state scheme at any time in your working life the amount you receive under the new state pension may be reduced. Your starting amount will be reduced because under the contracted out scheme, you would have paid lower NI contributions - or some of the NI contributions you paid were used to contribute to your stakeholder or personal pension instead of the additional State Pension.

For more information on the new State Pension you can visit the gov.uk website: https://www.gov.uk/new-state-pension

What if I don’t qualify for any State Pension or less than the full State Pension?  

Depending on your circumstances and any other income or savings, you may be able to claim Pension Credit.

Pension Credit

Did you know that around a third of people who could be entitled to Pension Credit do not claim it? You could be missing out on extra money – read on for more information!

There are two types of Pension Credit: Guarantee Pension Credit and Savings Pension Credit. Some people get one or the other and some people can get both.

Guarantee Pension Credit

Guarantee Pension Credit is a benefit which people of Pension Credit Age can claim; it tops up your income to a minimum level. It is much more generous than the working age means-tested benefits. Even if you are only entitled to a small amount, the good news is that you automatically qualify for maximum help with your rent too!

What is Pension Credit age?

Pension Credit age is gradually increasing: in July 2017 it was 64 and by September 2020 it will be 66. You must have reached Pension Credit age to be able to claim Pension Credit. If you are not sure when you reach Pension Credit age, you can use the gov.uk website to check when you will. See:

https://www.gov.uk/calculate-state-pension

What if my partner has reached Pension Credit age but I haven’t?

If you are a couple and one of you has reached Pension Credit age, you can make a claim for Pension Credit. But this is something that will change in the future – ‘mixed age couples’ will have to claim Universal Credit instead, which is much less generous. So it is worth checking if you could be entitled, and claim Pension Credit now; if you do get Pension Credit you can stay on it for as long as you remain entitled to it and will not have to change to Universal Credit.

How much could I get?

Guarantee Pension Credit tops up your income to a certain level. The amount you could get depends on whether you are single or a couple and whether you have certain circumstances that mean you need more money to live on. Because it is a top-up benefit, the amount you can get also depends on the amount and type of other income you receive and the level of any savings you have above £10,000.

How do I make a claim?

The easiest way to make a claim is by ringing the Pension Credit claim line on 0800 99 1234.

Savings Pension Credit

Savings Pension Credit is for people aged 65 and over. It provides extra money to some people who have made some additional provision for their retirement, eg. private or works pensions.

Changes introduced in April 2016 mean that those who reach State Pension age on or after 6th April 2016 will not be eligible to make a new claim for Savings Pension Credit.

People who were already getting their State Pension, or who reached State Pension age before 6 April 2016, can still make a claim for Savings Pension Credit. However, if they are a member of a couple and the younger one reaches State Pension age on or after 6 April 2016, they will not have access to Savings Pension Credit unless they have already been awarded it before this date and have remained continuously entitled to it since then.

No more Assessed Income Periods from April 2016

Assessed Income Periods were periods set by the Pension Service during which you did not need to report changes in your pensions, savings or investments, and your Pension Credit would not be reduced if your income or savings increase during your Assessed Income Period.

Since April 2016 no new Assessed Income Periods have been set and those which were already in place and which had been set for longer periods ended earlier.

This means people who get Pension Credit will need to report all changes in their circumstances that could affect their entitlement straight away.

New rules for people who go abroad for 4 weeks or more

If you go abroad, outside Great Britain, and you do not intend to be back within 4 weeks or you are not back home within 4 weeks, your Pension Credit (and Housing Benefit) will stop. There are exceptions – there is a 26-week limit for if you, your partner or dependent child are in hospital or undergoing medical treatment abroad and an 8-week limit if you are abroad due to the death of a close relative.  If you go to Northern Ireland, this counts as abroad. When you go abroad you must expect to return home within the 4 (or 8 or 26) weeks and actually be back within that time period. These rules have applied since 28th July 2016.