Basic state pension

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

General principles

The aim of the Basic State Pension (also known as the Basic Retirement Pension) is to provide anyone who has paid (or been credited) sufficient UK National Insurance contributions the chance to earn a pension, payable by the state, generally from when they reach State Pension age.

State Pension age

State Pension age is presently 60 years for a woman and 65 years for a man.

From 6 April 2020, the State Pension age will be equalised at 65 for men and woman. The change will be phased in by gradually increasing women's State Pension age over a 10 year period between 6 April 2010 and 6 April 2020.

This will not affect women born on or before 5 April 1950, who can still claim their State Pension at 60. Women born on or after 6 April 1955 will have an SPA of 65. Women born between 6 April 1950 and 5 April 1955 will have an SPA of between 60 and 65. cite web | url = http://www.thepensionservice.gov.uk/pdf/np46/np46apr05.pdf | title=a guide to State Pensions| | authorlink = The Pensions Service |date=2007-05-08]

Pensions Bill 2007, which is progressing through Parliament proposes to raise State Pension age from 65 to 68 over a 22 year period between 6 April 2024 and 5 April 2046. cite web | url=http://www.publications.parliament.uk/pa/cm200607/cmbills/056/2007056.pdf|title=Pensions Bill 2007|date=2007-05-08]

Calculations

The Basic State Pension is based on the entire UK National Insurance record of the individual. Depending on the age of the claimant, the calculation may be split in to two parts, one for the National Insurance record prior to 1975 and one for the National Insurance record post-1975, and the resulting figures combined to give the complete Basic State Pension Entitlement.

Prior to April 6, 1975

Every contribution paid or credited between April 6, prior to the 16th birthday (or date of entry to the UK system if later) and April 5, 1975 is totalled up.

This figure is then divided by 50 to give the number of qualifying years earned towards the Basic State Pension. If this number is greater than the number of years between the April 6 prior to the 16th birthday and April 5, 1975, the number of years is capped at this figure.

This calculation is repeated for each tax year between April 6, 1975 prior to the date of entry in to the UK National Insurance system (if later) and the last compete tax year on record (or the April 6, 1975 prior to State Pension Age, if earlier).

Once the number of qualifying years has been calculated the amount of Basic State Pension can be calculated.

The first step is to find the number of years needed for a full Basic State Pension, this depends on the sex and date of birth of the person claiming the pension.

At present, a man needs 44 qualifying years for a full Basic State Pension and a woman needs 39 years. For a minimum Basic State Pension, a man needs 25%, or 11 years and a woman needs 26% or 10 years.

Once the number of years that is needed has been found, it is then compared to the number of years needed for a full Basic State Pension and the resulting figure calculated as a % of the full Basic State Pension. In 2008-2009, the full basic State Pension is £90.70 a week for a single person and £145.05 a week for a couple (www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/StatePension/index.htm), but your individual circumstances may affect the amount you get.

Married couples

A wife can claim extra Basic State Pension based on the National Insurance contributions paid by her husband. If the wife has a Basic State Pension of less than 60% of her husbands, then when he reaches State Pension Age, she is able to have her Basic State Pension topped up to 60% of his Basic State Pension without him losing anything from his record.

From the 6th April 2010 , a man will be able to claim an increase based on the number of contributions paid by his wife

See also

* Graduated Retirement Benefit
* Pensions Credit
* State Earnings-Related Pension Scheme
* State Second Pension

Notes