State Pension
All pensioners aged over 80 years receive an addition of 25p per week paid with the State Retirement Pension. Whilst most benefit rates are unchanged as at 6th April 2016, the state pension has been increased as part of the governments “triple lock” policy. As at the date of publication the advisory committee on pensions and benefits had advised that the “triple lock” policy was unsustainable. The government will consult on changes to this. State pension - calculation and qualification The amount of state pension received is dependent on the number of years’ contributions that have been paid subject to an annual minimum ‘qualifying’ threshold. It is not, as often perceived, based on the total value of contributions paid over time. From 6th April 2020 individuals retiring will receive a single tier state pension of £179.60 per week (was £175.20 from 6th April 2020, £168.60 from 6th April 2019, £164.35 from 6th April 2018, £159.55 from 6th April 2017 and £155.65 per week from 6th April 2016) (see below). COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS Entitlement to the current full state pension is subject to a minimum of 35 years (39 for women or 44 for men prior to April 2010) ‘qualifying years’ contributions. A qualifying year being a tax year during which earnings were not less than 52 times the NICs Lower Earnings Limit (LEL) - £120 a week for 2020/21. In certain circumstances National Insurance credits, which count towards a contribution record, are added to protect a contributor’s entitlement: • when in receipt of certain benefits e.g. Jobseeker’s Allowance, Statutory Maternity Pay, Statutory Sick Pay, Maternity Allowance, Working Tax Credit. • for each tax year between the age of 60 to 65. Married women may be entitled to receive state pension based on their husband’s contribution record - see Category B above. For women the full benefit will also be dependent on age (see State Pension Equalisation below). State pension - deferment From April 2005 the Government introduced the option to take a deferred state pension as a taxable lump sum instead of a higher weekly pension. By deferring the pension by at least a year a lump sum will be payable and interest will become payable on the deferred pension at Bank of England base rate +2%. The Pension Act 2004 brought forward the previously announced change to the late retirement increase from 1/7% to 1/5% for each week by which an individual defers the receipt of the State Pension. The maximum deferral period of five years was abolished and the minimum period of deferral was reduced from seven to five weeks. From 6th April 2006 a person deferring state pension may claim an additional 1% of their weekly pension for every 5 weeks of deferment or a one-off lump sum provided deferment is for at least 12 consecutive months. No printing, copying or reproduction permitted.
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