What You Must Know About Old Age Pensions
UK old age pension or the Basic State Pension is a form of government-regulated savings scheme that can be accessed by all its citizens. Just because you turn a specific age, like 60 for a woman and 65 for a man, it does not entitle you to the basic retirement pension. Learn why superannuation UK is so important for you. Don’t miss our detailer article that will help you understand it in details!
The Basic State Retirement Pension or Old Age Pension in the UK is based on the number of your National Insurance contributions during your qualifying years. In 2009-10, single men and women can get £95.25 a week while those who have a partner can get £152.30 a week.
The old age pension UK is lower than the income support limit so you can add other forms of pensions if you have no other income generating funds. Make sure to check our article to get informed how to find the best pension plan for you.
Facts About The Old Age Pension
- Its original goal when it was first established in January 1909 was to prevent poverty in old age. At that time, you had to be 70 years old to be eligible.
- As of 2010, both men and women have to be 65 years old in order to get the full basic state pension. By 2046, this age limit will be increased to 68 years old.
- As of 6 April 2010, you can have access to your funds if you are 55 years old (provided you satisfy the conditions). On the other hand, you can defer receiving any amount from your pension until you are 75 years old.
- The Basic State Pension1 is taxable. But it is unlikely for those who have low personal allowance (less than £9,500) because it is lower than the required tax threshold.
Issues With Old Age Pensions
- Because of the advanced technology, social and medical conditions have also improved. People live longer and population growth is at a steady decrease. But since the number of young individuals entering the work place has also declined, fewer taxes are raised, which affects the amount available.
- Due to the changes in the state pension rules, pensions depend on price increases rather than the earnings increase.
How do I qualify?
It does not matter whether you are working or not working as long as it is 60 years old for women and 65 years old for men, you can qualify for a basic state retirement pension.
How much can I get?
Each year, the amount that an individual can get from a basic state retirement pension is always reviewed and increased. As of April 2011, it is:
- £102.15 for singles
- £61.20 if based on your late partner’s contributions
- £61.20 for non-contributory individual over 80 years old
What are the rules for part time workers?
The lower earnings limit is £95 a week or £4,940 a year. If you are a part time worker and your wages are less than this, you will not be able to avail of the basic state retirement pension.
Try to get a home responsibilities protection or class 3 voluntary NI contributions.
Is it taxed?
Yes, although it does not usually reach the tax threshold. If your basic state retirement is around £4,950 a year, then it will be exempted from any taxes.
What is the minimum income guarantee?
You can get a minimum income guarantee if your savings do not go over £6,000. It is £130 a week for singles and £198.45 for those with partners. It becomes a little bit higher if you are over 80 years old. When considering your options, you might be interested in reading more of your rights concerning pensions in the UK.
Can I combine my old age pension with my other personal plans?
Qualifications to get an old age pension aren’t dependent on your membership with other personal pension plans or occupational schemes. But if the total income is more than £9,500, you will have to pay taxes of 20% on the remaining amount. Learn why superannuation UK is so important for you. Don’t miss our detailed article that will help you understand it in details!
Find Out More About UK Pensions.
Old Age Pension Contributions
- For those who are still working today, it is probable that the old rules apply to you in order to qualify where the required contributions are for 44 years during your qualifying years (16-65).
- After establishing The UK Pensions Act 2007,2 the required contributions during your qualifying years were brought down to 30.
- You can still access the scheme even if you did not meet the minimum 30 years of contribution. Just “pay” for those extra years you need to be eligible for the full monthly payment from the government.
- For full-time caregivers of disabled individuals or for those who have special reasons not to go to work, you can also pay the required number of National Insurance contributions. Visit the website of the UK government for all the details.
If you did not make it to the 30-year quota of NICs, you can still get a partial pension.
- If you have been working overseas and your payments lapsed, you still have to catch up with all the contributions you have missed. Contact your local DSS office who will advise you in this regard.
- If you are an employee, you can also be eligible for the State Second Pension, also known as the SERP (State Earning Related Pension). Contact the DSS office3 for further details.
Old Age Pension Values
For 2012/13, the amount is set to £107.45 a week for a single person and £171.85 for spouses/partners. It will still depend on your NICs4 during your qualifying years but you can increase your retirement funds by paying the Class 3 Voluntary NI Contributions. You can contact us and talk to our reputed financial adviser5 for a more detailed explanation of your options. We’ve prepared a detailed article with all the information you will ever need on widows pension. Make sure you check it out.