State pension

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • State pension
  • Introduction
  • Reaching state pension age prior to 6 April 2016
  • Reaching state pension age from 6 April 2016 onwards
  • Other pension income
  • State pension age
  • Entitlement to state pension
  • Obtaining a forecast
  • Deficiency in national insurance record
  • Time-limited opportunities to make up deficiencies in national insurance records
  • More...

State pension

Introduction

The state pension is paid from the National Insurance Fund, with contributions by current taxpayers used to fund the current state pensions. There is no investment to meet the future pension needs of current taxpayers.

Reaching state pension age prior to 6 April 2016

Where the individual reached state pension age before 6 April 2016, there are three types of state pension payable in the UK:

  1. category A ― the basic state pension and state second pension (S2P, formerly SERPS), based on the individual’s national insurance contribution (NIC) record

  2. category B ― the basic state pension and S2P, based on the taxpayer’s spouse or civil partner’s NIC record (can be claimed if the spouse / civil partner’s record is better than their own)

  3. category D ― the supplement payable to those pensioners over 80 years old irrespective of contribution record (currently £0.25 per week)

Categories A and B are mutually exclusive; an individual cannot claim a state pension under both. However, taxpayers in receipt of a category A or B pension will be entitled to a category D supplement once they reach 80 years of age.

Reaching state pension age from 6 April 2016 onwards

Where the individual reaches state pension age on or after 6 April 2016, the single-tier state pension applies. The GOV.UK website helpfully states that this applies to men born on or after 6 April 1951 and women born on or after 6 April 1953. All previous NIC records are recognised.

The amount received depends on the individual’s NIC record. For details of how the amount is calculated, see the GOV.UK website.

The single-tier pension is designed to address some of the problems of an ageing population where many have insufficient pension provision.

Aside from a single-tier pension (which replaced the categories listed above), the other main differences with the pre-6 April 2016 state pension are:

  1. the individual needs 35 qualifying years of NIC to receive a full pension (as opposed to 30 qualifying years for those

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