The State Pension
How does it work?
A new state pension system came into effect from 6 April 2016. This page provides you with information on how those reaching state pension age (SPA) before and after 6 April 2016 are affected.
The Government introduced a new State Pension system from 6 April 2016. The way the new State Pension works, depends on when you reach your State Pension age (SPA).
Reached State pension age before April 2016
The previous rules apply to you if you already reached your SPA before 6 April 2016.
There are two parts to the State Pension - the basic state pension (BSP) and the additional state pension (ASP).
Basic State Pension (BSP)
You qualified for the basic state pension (BSP) if at least one of the following applied to you:
- you paid national insurance contributions;
- you claimed national insurance credits;
- you had a spouse or civil partner whose national insurance contributions cover you for benefits.
The basic State Pension (BSP) did not depend on how much you had earned, but on your national insurance record. To get the full BSP, you needed to have paid National Insurance or received credits for 30 years. If you had fewer than 30 years credit, you received a lower BSP based on the number of years of contributions or credits you had. You only need one qualifying year to get some BSP. (If you reached your State Pension age before 6 April 2010, the number of credits were 39 years (for women) or 44 years (for men) to get the full BSP.
Spouses and civil partners who had not paid enough contributions themselves to receive a BSP may have received a pension based on their partners' contributions of up to 60% of the partner's BSP.
Additional State Pension (ASP)
You may be claiming an additional State Pension. In most cases, this will be State second pension (S2P) but if you were working before April 1975, you may also have some graduated state pension.
State second pension (S2P) - This is paid in addition to the BSP. Until April 2002 it was known as SERPS. S2P is based on your National insurance contribution record and does depend on your earnings and whether or not you've claimed certain benefits. If you were an employee and had high enough earnings you would have contributed to S2P unless your workplace pension or personal pension was contracted out of S2P.
Graduated Retirement Benefit - This was the forerunner to SERPS and the amount of pension earned depends on the number of units of graduated contributions you paid between April 1961 and April 1975 and the value of a unit at the time you come to claim your pension.
When you can claim your State Pension
Reaching your SPA on or after 6 April 2016
The two-tier system, as described in the section above, has been replaced by a new system as of 6 April 2016.
To qualify for the new State Pension, you will need at least 10 qualifying years on your National Insurance record. If you entered the National Insurance system on or after 6 April 2016 you will need at least 35 qualifying years to get the full new State Pension. You will receive a proportionate amount of the new State Pension if you have between 10 and 34 qualifying years.
The value of the new State Pension is currently £159.55 per week.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.