The State Pension
The UK State Pension changed on 6 April 2016 for people who reached State Pension age on or after that date. This means that men born on or after 6 April 1951 and women born on or after 6 April 1953 now qualify for the single-tier State Pension (assuming they have built up an entitlement). Anyone who reached State Pension age before 6 April 2016 falls under the old system.
The Single-tier State Pension
The government believed the old system was too complicated – it was difficult to work out how much you would be entitled to until you were close to retirement age. With the single-tier State Pension, you will know from a much younger age how much you are likely to get. Contracting out of the Additional State Pension was also permitted under the old system adding further complication in calculating someone’s entitlement from the state. Contracting out of the Additional State Pension ended on 5 April 2016.
It is different to the basic State Pension in the following ways:
- The maximum payment is set at ￡175.20 per week in 2020-21
- 35 qualifying years are required in order to obtain the full amount
- 10 qualifying years are required in order to be entitled to any amount
- There is no option to contract out
- Someone can no longer claim based on their spouse’s or civil partner’s NI record (except those covered by transitional protection)
Deferring the State Pension
A person can also increase the starting level of their State Pension through deferment (this is not an option if they are on certain benefits). This is also an option for someone who is already claiming their State Pension, although this can only be done once (this is not normally possible if the person lives outside of the UK). The increase they gain from deferring depends on when they reach State Pension age. Read more about deferring the State Pension.
Inheriting State Pension
The basic State Pension
If a spouse or civil partner reached State Pension age before 6 April 2016, they should contact the Pension Service following the death of their partner to check whether they are entitled to claim. They may be able to increase their basic State Pension by using qualifying years built up by their partner if they do not already qualify for the full amount.
If a recipient of the basic State Pension dies when they are single, divorced or where their civil partnership has been dissolved, their estate may be able to claim up to three months of the deceased’s State Pension (but only if the pension hasn’t been claimed).
The single-tier State Pension
Someone may inherit an extra payment on top of their single-tier State Pension if they are widowed, but only if they do not remarry or form a new civil partnership before they reach State Pension age.
State Pension & marital situation
Someone who reaches State Pension age on or after 6 April 2016 will receive the new State Pension based on their NI record only. There is one exception to this – where transitional protection was provided for married women or widows who previously opted to pay reduced rate NI contributions. This was known as Reduced Rate Election or ‘the married women’s stamp’.
Where these rules apply, the person does not need 10 qualifying years of their own to receive any State Pension.
The State Pension – a technical guide
Here we examine the differences between the old and single-tier State Pensions and the options open to clients should they wish to boost their entitlement or defer their State Pension.Download the guide
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This represents a summary of our understanding of the law at the date of its last review (March 2020). Tax limits, benefits, allowances and rules are often subject to change and may change in future. Advisers and individuals should check that tax limits, allowances and rules have not changed.
The value of benefits depends on individual circumstances. Withdrawals from a pension will not normally be possible until age 55. Different options may have different effects for tax purposes, different implications for pension provision and different impacts on other assets and financial planning.