State pension age for women, currently 60, will be moved back
gradually to bring it in line with men at 65 during the next decade
starting from 6 April 2010. The revised age depends on your date of
birth. If you were born before 6 April 1950, then you will still be
able to get your state pension at 60.
If you were born between 6 April 1950 and 5 April 1955, you
state pension will be paid to you at a set date, which will be
between your 60th and 65th birthdays.
If you were born on or after 6 April 1955 your state pension age
will be the same as that for a man, i.e. currently 65.
State pension ages for both men and women will then move on one
year per decade between 2024 and 2046, so that by then (2046) the
state pension age for men and women will be 68.
To find out precisely what age and date applies in your case we
recommend you try our easy to use state pension age calculator by clicking
here.
Entitlement to the basic state pension depends, amongst other
things, on the payment of full rate national insurance (NI)
contributions over a large proportion of your working life.
Changes which it is anticipated will be of particular benefit to
women will come into force on 6 April 2010
To qualify for the full state pension -currently £95.25 a week -
those women who reach state pension age before 6 April 2010 are
required to have 39 NI qualifying years - although this can be
reduced to as little as 20 if they have spent years at home since
1978 bringing up children or caring for ill or severely disabled
people.
For those reaching state pension age on or after 6 April 2010
the maximum requirement for a full basic pension is reduced to 30
years. This applies to both men and women.
It should be emphasised that this change is not retrospective
and the reduction to 30 years will not apply to anyone who has
already reached state pension age before 6 April 2010.
No - it is your age that matters. It is irrelevant whether you
are continuing in work or not.
Your national insurance contribution requirement depends on the
date you reach your state pension age, not the date you finish
work.
Not in respect of the period for which you paid the reduced
stamp. You may become entitled to a state pension in respect of
periods for which you were paying the full stamp.
If you are still married you may also become entitled to a
reduced state pension by virtue of your husband's NI
contributions.
You can get 60% of his basic pension but only from the date he
reaches his state pension age and starts to draw his pension. There
is a slight change to this from 6 April 2010 when the requirement
for the husband to be actually drawing his pension will no longer
apply.
The 60% pension is not in addition to anything you may be
entitled to in your own right. It is instead of it.
The number of qualifying years required to build up the basic
state pension can be reduced to as little as 20 years for those
with caring responsibilities or for those bringing up children.
This is known as Home Responsibilities Protection (HRP). From 6
April 2010 the current HRP will be replaced by a new weekly NI
credit for those bringing up children up to the age of 12 and for
those who spend at least 20 hours a week caring for severely
disabled people. Years before 6 April 2010 covered by HRP will be
converted into years of credit. Credits have the effect of treating
you as having paid a qualifying NI contribution.
Unfortunately, yes - if you are in work and earning above the
minimum prescribed amount it is a requirement that both you and
your employer pay national insurance. It should perhaps be
mentioned that your NI contributions do not only pay for the state
pension, but also cover you for other short-term benefits (such as
jobseekers allowance and incapacity benefit) and bereavement
benefits.
The normal time limit for making good missing national insurance
contributions is 6 tax years from the end of the tax year in which
the missing contributions were due. However, for the years 1996/97
to 2001/02 a special concession has been made following some
failings by the then Inland Revenue to issue notices at the end of
the relevant tax years to people who had paid some contribution but
not enough. In respect of those years only, the option of paying
voluntary contributions has been extended to 5 April 2009 for those
who reach state pension age on or after 24 October 2004. For those
who have already reached state pension age before 24 October 2004
they have until 5 April 2010 to make good the missing
contributions.
As explained in the previous question and answer, it is possible
at the present time to pay voluntary contributions back to 1996/97.
But this can only be done of course if the years in question were
prior to the year in which your 60th birthday fell and you had not
already paid a full contribution for those years. Additionally you
cannot pay for a year in which your liability was at the married
women's reduced rate.
Subject to those restrictions, if you can pay, it is worth
considering whether it would be in your financial interests to do
so. If you have been drawing your pension since age 60 the increase
in the rate would normally be backdated to your 60th birthday and
this could result in a sum of money which actually exceeds the
amount of backdated voluntary contributions you have to make. If
you reached state pension age before a specified date (24 October
2004) it may not even be necessary to actually pay the
contributions as the cost of these would be offset against the
arrears of extra pension which would otherwise be due. If you
reached state pension age after this date you will have to pay the
voluntary contributions up front and then receive the arrears due
in full.
This will depend on your current national insurance contribution
record and whether payment of these voluntary contributions will be
necessary, bearing in mind that for you, the 30-year requirement
will apply. If you don't already have details of your record it is
probably worth having a word with the National Insurance
Contributions Office to try and establish your exact position.
The Government's stated objective is, 'subject to affordability
and the fiscal position,' to increase the basic state pension in
line with earnings from 2012, but in any event by the end of the
next Parliament at the latest. This probably means that the
restoration of the earnings link will be made sometime between 2012
and 2015.
If your husband is a member of an occupational pension scheme
the benefits payable will depend on the scheme rules. Often this
type of scheme provides a tax free lump sum and a widow's pension.
Some schemes also provide pensions for children below a certain
age.
If your husband is a member of an occupational money purchase
scheme or a personal pension arrangement, there may be death
benefits similar to that detailed above but, most likely, the only
benefit payable will be the value of the fund he has saved to the
date of his death.
In respect of state benefits there are three benefits, one or
more of which could be payable. These are Bereavement Payment,
Bereavement Allowance and Widow Parents Allowance.
The Bereavement Payment is a lump sum payment of up to £2,000,
normally tax-free.
Bereavement Allowance is a series of taxable weekly payments
(currently up to £95.25) for up to 52 weeks.
Widowed Parents Allowance is a taxable benefit (currently up to
£95.25 per week) for those who have a qualifying child for whom
they are entitled to receive Child Benefit.
You would only be entitled to either Bereavement Allowance or
Widowed Parents Allowance but either can be paid in addition to
Bereavement Payment.
For further
details you can refer to the state pension section of this
site.
The amount of your basic state pension would normally increase
to the level he was receiving, if this was higher.
You may also be entitled to claim a share of his additional
pension (formerly SERPS now called State Second Pension). The exact
amount will depend on his date of birth and will be between
50%-100% of the amount he was receiving.
For the purpose of claiming a state pension you can have your
former spouse's record of national insurance contributions
substituted for your own, either for:
- all the tax years in your working life up to the end of the tax
year in which your marriage ended, or the end of the tax year
before the one in which you reach state pension age, whichever
comes first.
or
- all the tax years in your working life from the beginning of
the one in which you married your former spouse up to the end of
the one in which your marriage ended, or before the one in which
you reach state pension age, whichever comes first.
None of this applies if you remarry before you reach your state
pension age. Instead you will, if necessary, be able to claim 60%
of your new husband's basic state pension when he reaches his state
pension age.
There are, of course, many different ways to save. Individual
Savings Accounts (ISAs) or property are two possible options. ISAs
allow money invested to grow tax-free and provide easy access to
your capital but bear in mind that values can fluctuate and may go
down. Putting money into property as a second home or a buy-to-let
has generally proved to be a profitable investment for many people
in recent years but there are downsides and no guarantees,
particularly in the present financial climate, that will continue
to be the case. Professional financial advice should invariably be
sought in formulating your plans in this area.
The big attraction of a pension is the tax relief that is given
at your highest personal rate. With a company scheme your employer
will also be contributing money on your behalf into your pension
plan and not joining such a scheme when you have the option to do
so is tantamount to turning money away.
For a married woman building up a private pension in your own
right means you may not be quite so dependant on your husband in
later life. Also the restrictions that the pension rules impose on
when and how you can access the benefits can help with the
discipline of saving for your eventual retirement.
To get details of an old pension scheme the first place to try
is the Pension Tracing Service. They are a Government department
that holds a register of pension schemes and their addresses.
They can be contacted on 0845 600 2537 or via their website, www.thepensionservice.gov.uk/atoz/atozdetailed/pensiontracing.asp.
They should hopefully be able to supply an up-to-date address.
If they can't or you write to the address supplied without
success then please contact the Pensions Advisory Service as we may
be able to make other suggestions to help.
There is no hard and fast answer to this. It is often useful to
start by asking "How much will I need to save in a pension plan to
provide the sort of retirement I want to enjoy?"
However it can sometimes help to think in terms of replacing a
percentage of the income you enjoy now. Several studies have
suggested a rough guideline of a half to two thirds of your income
may be enough to meet most people's expectations.
To achieve this you need to put away a certain percentage of
your income now. As a rule of thumb we would suggest a rough
starting point would be about half your age as a percentage of your
income.
So for example at age 30, that would mean 15% of your income. If
you cannot afford that much, any lower amount would be useful as a
start.
Pensions Credit is a mean tested benefit, that can be claimed by
people aged 60 or above living in Great Britain. Pension Credit
guarantees recipients in this age bracket an income of at
least:
- £130.00 a week if you are single
- £198.45 a week if you have a partner
Also, if you or your partner are 65 or over you may be rewarded
for saving for your retirement, up to:
- £20.40 if you are single
- £27.30 a week if you have a partner
For further details about the Pensions Credit you can refer to
the Pension Service website, www.thepensionservice.gov.uk
If you are going through a divorce and you and your ex-spouse
are looking at dividing up your assets, the Court is required to
take the pension benefits of both of you into account.
Through the Court, a divorcing couple can choose to:
- balance the pension rights against another asset, such as the
matrimonial home (this is known as Pension Offsetting); or
- arrange that when one party's pension eventually comes into
payment, a portion of it will be paid to the other party (this is
known as Pension Earmarking); or
- split the pension at the time of the divorce to give both
parties their own pension pot for the future (this is known as
Pension Sharing).
Pension Sharing is a popular way of dealing with the pension
benefits as it helps with the 'clean break' intention of the
divorce procedure.
For any period of paid maternity leave (i.e. ordinary maternity
leave) must be retained in the pension scheme and treated as if you
were in normal work.
If it is a defined benefits scheme any benefits payable are
based on the salary you would have received had you not gone on
maternity leave (this includes any Death in Service benefit).
If the scheme is a defined contribution scheme your employer
must pay a contribution based on the salary you would have received
had you not gone on maternity leave. This includes the right to any
pay increase that would have occurred.
For both types of schemes your contributions are based on the
level of pay you are actually receiving.
Any unpaid maternity leave (i.e. additional maternity leave)
which follows a period of paid maternity leave does not count as
pensionable service. So, the employer does not need to make
payments to cover this period. However, many employers do go beyond
the minimum requirement.
Please note that the above is a guide for information only. You
should always seek advice relevant to your own individual
circumstances. The Pensions Advisory Service cannot be held
responsible in law for any opinion expressed, nor should any such
opinion be regarded as grounds for legal action.
