Pension ABC

The statutory pension system in UK is part of the National Insurance (NI). You will be affiliated to the NI when paying NI contributions. NI contributions have to be paid in case of:

• being at least 16 years old and
• earning above £155 a week / being self-employed and making a profit of £5,965 or more a year,

or when you are treated as having paid (in case of illness or unemployment, you may be entitled for NI credits *).
With the first contribution you start to accumulate your pension entitlements with the State Pension scheme.
As soon as you pay NI contributions into your NI record, you get a NI number. You will find this e.g. on your payslip. If you do not have a NI number yet, please apply for it: https://www.gov.uk/apply-national-insurance-number

Please note:
The statutory pension scheme has been changed as of 6 April 2016. The new State Pension scheme is a so called single-tier scheme and provides a flat-rate pension depending on your National Insurance record when reaching the State Pension age. Until the change the State Pension scheme in the UK used to be a so-called ‘Two Tier System’. More information in question A.2.
*https://www.gov.uk/national-insurance-credits/overview

The former State Pension scheme, which has been closed on 6 April 2016, had two tiers:

• the Basic State Pension with a contributory, flat-rate benefit (and for pensioners with relatively low income also a means-tested support through the so-called “Pension Credit”) and
• as a second tier: a partially earnings-related State Pension which was in place since 1978 known as Additional State Pension in the form of:
  • between 1978-2002 the State Earnings Related Pension Scheme (SERPS) which was replaced
  • in April 2002 by the State Second Pension (S2P)

Since 1978 it was also possible to ‘contract out’ of the Additional State Pension and to choose a private/workplace pension scheme instead.
Both, the Basic and the Additional State Pension, were pay-as-you-go contributory systems. Both were financed through the system of National Insurance contributions.

The new scheme is applicable for you if:

• you are a man born on or after 6 April 1951
• or a woman born on or after 6 April 1953

Please note:

• if you have already started to accumulate pension entitlements with the old State Pension scheme, your current National Insurance records will be transferred into the new pension scheme. See question B4.
• if you have not accrued any pension entitlements in the UK so far, you start to accumulate pension entitlements only within the new single tier State Pension scheme.

 
Should you already have retired or be a man born before 6 April 1951 or a woman born before 6 April 1953, the amendment does not apply to you. You will receive your pension from the former pension scheme, even if retiring after 6 April 2016.
More detailed information are available under the following link: https://www.gov.uk/new-state-pension/eligibility

Yes, there is a qualifying period for the statutory retirement pension in the UK. To be entitled to a State Pension at all, you need to have at least 10 qualifying years.
Be aware: the 10 years do not have to be spent consecutively.
Qualifying years are defined as tax years during your individual working life in which you

• paid contributions (which is called NI contributions), or
• were treated as having paid (which is called NI credits e.g. for unemployment, sickness or as a parent or career) or
• paid voluntary National Insurance contributions

You have gained state pension service years in other EU/EEA countries or certain countries that have a bilateral social security agreement with the UK? These periods could be taken into account in terms of the minimum qualifying period. Please refer to Question A.8.

Should you have contributed to the State Pension in the past and under the old system your accrual has been converted into a so-called ‘starting amount’.

There are 3 scenarios possible. Please refer to question B 4

The NI contributions are paid by both employer and employee. Employees’ contributions are deducted from their salaries. The amount of your contributions depends on your employment status and how much you earn. The amount of your employer depends on how much you earn and on the so-called employee’s National Insurance category letter which you can find on your payslip (in most cases A-D). Also self-employed persons are in the system.

More information on the contributions you can find here: https://www.gov.uk/national-insurance/how-much-you-pay

No. You cannot claim for a refund in the State Pension scheme. Your times of National Insurance in the UK may be taken into account in other countries and vice versa, see Question A.8.

Yes, your times of pension insurance could be taken into account in other countries and vice versa in case of not fulfilling the required qualifying period in the UK and the other countries. This is most likely if you have lived and worked in:

• the European Economic Area (meaning the 28 EU member states as well as Iceland, Liechtenstein and Norway)
• Switzerland
• Certain countries that have a social security agreement with the UK*

* Find out if the country where you are living or where you used to live has a social security agreement with the UK: https://www.gov.uk/claim-benefits-abroad/where-you-can-claim-benefits

Please contact the International Pension Centre in order to report changes to your personal details (e.g. your address or bank details) by telephone or letter.
They can also give you advice or information about pensions and benefits if you live abroad or have been living abroad.

International Pension Centre
The Pension Service 11
Mail Handling Site A
Wolverhampton
WV98 1LW
United Kingdom
Website: https://www.gov.uk/international-pension-centre

The State Pension includes an old-age pension when you reach the State Pension age. The State pension age is currently (2016) 65 for men and 60 for women born on or before 5 April 1950. As of 2018 the pensionable age will be 65 for both men and women but it will rise further over the years.

• Check your individual State Pension age: https://www.gov.uk/calculate-state-pension/y

In case of illness or disability before one has reached the pensionable age, other benefits may be provided by the National Insurance. You’ll find advice at
https://www.gov.uk/financial-help-disabled
Other benefits of the National Insurance are:

• Contribution-based Jobseeker’s Allowance
• Contribution-based Employment and Support Allowance
• Maternity Allowance
• Bereavement benefits

Yes, there is a qualifying period for the statutory retirement pension in the UK. To be entitled to a State Pension at all, you need to have at least 10 qualifying years.
Be aware: the 10 years do not have to be spent consecutively.

Qualifying years are defined as tax years during your individual working life in which you

• paid contributions (which is called NI contributions), or
• were treated as having paid (which is called NI credits e.g. for unemployment, sickness or as a parent) or
• paid voluntary National Insurance contributions

You have gained state pension service years in other EU/EEA countries or certain countries that have a bilateral social security agreement with the UK? These periods could be taken into account in terms of the minimum qualifying period. Please refer to Question B3.

Yes, your times of pension insurance could be taken into account in other countries and vice versa if you do not fulfill the required qualifying period in the UK and the other countries. This is most likely if you have lived and worked in:

• the European Economic Area (meaning the 28 EU member states as well as Iceland, Liechtenstein and Norway)
• Switzerland
• Certain countries that have a social security agreement with the UK*

* Find out if the country where you are living or where you used to live has a social security agreement with the UK: https://www.gov.uk/claim-benefits-abroad/where-you-can-claim-benefits

Should you have already contributed to the State Pension under the old system your accrual has been converted into a so called ‘starting amount’.
There are 3 scenarios possible.

• Your starting amount is less than the full level of the single-tier pension. You can continue to build up a UK State Pension benefit towards the maximum amount (see below) until you reach the pensionable age in the UK. Should you have contributed for reasonable years, the reason for not being entitled to the full pension amount might be that you have not fulfilled the qualifying period of 35 years and/or have contracted out of the Additional State Pension (S2P).
• Your starting amount is equal to the full level of the single-tier pension (currently £151,25 (2016)). You are entitled to a full pension under the new State Pension scheme. You are not able to build up higher benefits in this scheme.
• Your starting amount is above the full level of the single-tier pension. You are entitled to a full pension amount and you will receive the difference between your starting amount and the full single-tier amount as an extra payment as a ‘protected payment’ on top of the full single-tier weekly amount.

Source: https://www.moneyadviceservice.org.uk/en/articles/the-new-state-pension-rules-and-changes-explained

The amount of your State Pension benefit depends on your National Insurance (NI) record when you reach the State Pension age. Your NI record has been built up if you

• are working or paying National Insurance contributions or
• are getting National Insurance credits, e.g. for unemployment, sickness or as a parent or carer
• pay or having paid voluntary National Insurance contributions

The full rate of the new State Pension is a weekly amount (£151,25 (2016)). You will receive the full pension amount when having paid 35 years of contributions.
If you have less than 35 years (but at least the minimum qualifying 10 years of contributions), you will get a pro rata amount, which is calculated as seen in the picture below.

Based on this calculation you will get £4.45 a week to your new State Pension for every year up to a maximum of £151,25 in 2016.
Your NI record before 6 April 2016 is used to calculate your starting amount in the new scheme. Regarding the transition please refer to question B.4
 
Please check the Pension Calculator for your State Pension:
https://www.gov.uk/calculate-state-pension

If you reach State Pension age in more than 30 days you can get a statement:

• if you fill out an application form which is available here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/434420/br19-feb-2015-interactive.pdf
• Or call the Future Pension Centre ( contact data here. https://www.gov.uk/future-pension-centre)

On the pension statement you can find out the number of qualifying years on your National Insurance record and how much State Pension you may get under the following conditions.
If you are under 55, you can also get an estimate of how much basic State Pension you may get by using the Pension Calculator, https://www.gov.uk/calculate-state-pension
More information about the pension statement here: https://www.gov.uk/state-pension-statement

You may be able to pay voluntary contributions if you won’t have enough years of National Insurance contributions to get the full State Pension. Meaning less than the required 35 years. Learn more about this option: https://www.gov.uk/voluntary-national-insurance-contributions

See question A3.

At the earliest you are entitled to claim for the new State Pension when you reach the State Pension age. State pension age is currently (2016) 65 for men and 60 for women born on or before 5 April 1950. As of 2018 the pensionable age will be 65 for both men and women but it will rise further over the years.

• The State Pension Age Timetable is available here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/310231/spa-timetable.pdf
• Check your individual State Pension age: https://www.gov.uk/calculate-state-pension/y

If you still live in the UK
You won’t get your State Pension automatically - you have to claim it. You should get a letter 4 months before you reach State Pension age, telling you what to do.

If you live abroad
You should send a claim form 4 months before you reach your State Pension age.
Contact the International Pension Centre (IPC) if you haven’t received a letter 3 months before you reach State Pension age via the online enquiry form.
Telephone: +44 (0)191 218 7777
Textphone: +44 (0)191 218 7280
Monday to Friday, 8:30am to 3:30pm
 

You’ve worked in the UK and abroad
To claim your State Pension if you’ve worked in the UK and abroad, send the international claim form to the IPC (see above).

You’ve only worked, lived or are working abroad
You must claim the State Pension through the relevant authority of the country you currently live and have worked in:

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or Switzerland.

Rest:

Contact the IPC if you’ve worked or lived in a country not listed above.
More information here: https://www.gov.uk/state-pension-if-you-retire-abroad/how-to-claim
Please note that you won’t get yearly increases if you live outside these areas. But if you return to live in the UK, your State Pension will be increased each year.
Learn more about increasing your pension in the UK with gained qualifying years from countries abroad:
https://www.gov.uk/state-pension-if-you-retire-abroad/rates-of-state-pension

The amount of your State Pension benefit depends on your National Insurance (NI) record when you reach the State Pension age. Your NI record has been built up if you

• are working or paying National Insurance contributions or
• are getting National Insurance credits, e.g. for unemployment, sickness or as a parent or carer
• pay or having paid voluntary National Insurance contributions

The full rate of the new State Pension is a weekly amount (£151,25 (2016)). You will receive the full pension amount when having paid 35 years of contributions.
If you have less than 35 years (but at least the minimum qualifying 10 years of contributions), you will get a pro rata amount, which is calculated as seen in the picture below.

Based on this calculation you will get £4.45 a week to your new State Pension for every year up to a maximum of £151,25 in 2016.
Your NI record before 6 April 2016 is used to calculate your starting amount in the new scheme. Regarding the transition please refer to question B.4
 

Your NI record before 6 April 2016 is used to calculate your starting amount in the new scheme. Regarding the transition please refer to question B.4
Please check the Pension Calculator for your State Pension:
https://www.gov.uk/calculate-state-pension

Your State Pension can be paid into:

• a bank account in the country you’re living in
• a bank or building society account in the UK

You’ll be paid in local currency - the amount of money you get may differ due to exchange rates.
More information: https://www.gov.uk/state-pension-if-you-retire-abroad/paymen

According to the www.gov.uk website there has been no change to the rights and status of EU nationals in the UK, and UK nationals in the EU, as a result of the referendum. You can claim State Pension abroad if you’ve paid enough UK National Insurance contributions to qualify.