Basic state pension

The Basic State Pension (formerly the Retirement Pension), is part of the United Kingdom Government's pension arrangements, alongside the Graduated Retirement Benefit and State Earnings-Related Pension Scheme (now State Second Pension).

The State Pension is a "contribution-based" benefit, and depends on an individual's National Insurance (NI) contribution history. For someone with the 30 qualifying years (years in which NI contributions were paid), it is payable at a flat rate of £122.30 a week (10 April 2017 - 8 April 2018). 35 years contribution is needed to get the full new state pension from 6 April 2016. A smaller, pro-rata, pension is paid to someone with fewer qualifying years. People who were contracted-out paid lower NI contributions and will receive a lower state pension. An "age addition" of 25p a week is paid to people over 80.

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. Pensioners living in other overseas countries without a current agreement 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.

The state pension age (SPA) is presently 65 for men. Under the Pensions Act 1995, the SPA for women is in the process of being increased from 60 to 65. The Pensions Act 2011 will raise the SPA to 66 for both men and women by 6 October 2020. Under the Pensions Act 2007, the SPA for both men and women will be raised to 68 between 2044 and 2046. Under the Pensions Act 2014, the Government brought forward the rise in State Pension age to 67 for both men and women to 6 April 2028. Details are as follows.

It is possible to defer claiming a State Pension at SPA. Deferred pensions are increased by 1 per cent for every five weeks that the pension is not claimed (approximately 10.4 per cent a year). From 6 April 2016, the increase in pension arising from deferral will be reduced to approximately 5.8% per year for those who reach pension age on or after that date. 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 cent a year over the Bank of England base rate.

The Basic State Pension is based on the National Insurance record of the individual. Each year that National Insurance was paid is called a qualifying year. For 2012:2013 to be a qualifying year you need to earn at least £5564 if you are an employee, or £5595 if you are self-employed, and have paid (or been credited with) National Insurance contributions based on these earnings. Men born after 5 April 1945 and women born after 5 April 1950 need 30 qualifying years for a full Basic State Pension, with a single qualifying year required to get any State Pension. Men born before 6 April 1945 needed 44 qualifying years for a full Basic State Pension, and women born before 6 April 1950 needed 39 years; to get any State Pension, an individual needed 25 per cent of the qualifying years required for a full pension. Since April 6, 2016, 35 qualifying years are needed to receive the full new state pension. State pension amounts can be reduced if the pensioner was in a contracted-out works pension scheme. Always get a state pension forecast from the official government website.

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