Pensions and retirement planning

The new State pension is received by anyone reaching SPA age on or after 6 April 2016, and the full amount is £203.85 per week in 2023/24.

Individuals who had already reached SPA before 6 April 2016 are unaffected by the introduction of the new State pension.

For those reaching SPA after the new State pension was implemented, it completely replaces the previous system of State pensions including the basic State pension, State second pension (S2P) and the savings credit element of the State Pension Credit, as well as being set above the level of the guarantee credit.

As the UK has now left the EU there have been changes to rules regarding accrual of State pension whilst working abroad.

Where an individual works in the EU, they will pay NICs in the UK if they have a certificate from HMRC. A certificate can be applied for if the person is:

Working in the EU temporarily for up to 2 years

A multi-state worker working in the UK and one or more EU country

A civil servant working for the UK Government

Working onboard a vessel at sea, with a UK flag or

Working as flight or cabin crew where the airline’s home base is in the UK

There are different rules for those working in Iceland, Liechtenstein, Norway or Switzerland.

The Starting (or foundation amount)

Individuals who had not reached their SPA on 6 April 2016 had a starting amount calculated, also known as the ‘foundation amount’. This was ...

Shortened demo course. See details at foot of page.

For those who reach their SPA on or after 6 April 2016, it is still possible to defer taking the State pension. The increase rate has fallen to 5.8% for each full year (1% for each nine week period), though it will no longer be possible to take the deferred amount as a lump-sum payment. The minimum qualifying deferred period has also increased from five weeks to nine weeks, and it is no longer possible for a spouse or civil partner to inherit a deferred new State pension.

Anyone can defer their State pension; it is not conditional on living in the UK.  Where someone normally lives outside the UK the amount they receive when they make a claim will depend on where they live.

Those that live in the EEA, Switzerland or a country that has a social security agreement with the UK (except New Zealand and Canada) are subject to the same rules as the UK.

Those that live in any other country will receive an extra State pension equal to the bigger of:

Their State pension when they reached State pension age or

Their State pension at the date they moved abroad

State Pension forecasts

State Pension forecasts  are issued by the Government. These are useful to understand whether paying Class 3 NICs would be beneficial and useful for those who have been contracted-out in the past to understand the adjustment that’s been made for this.

Applications can be made online: www.gov.uk/check-state-pension.

State how the new State pension usually increases in payment.

Answer : Purchase course for answer

The new State pension is received by anyone reaching SPA age on or after 6 April 2016, and the full amount is £203.85 per week in 2023/24.

Individuals who had already reached SPA before 6 April 2016 are unaffected by the introduction of the new State pension.

For those reaching SPA after the new State pension was implemented, it completely replaces the previous system of State pensions including the basic State pension, State second pension (S2P) and the savings credit element of the State Pension Credit, as well as being set above the level of the guarantee credit.

As the UK has now left the EU there have been changes to rules regarding accrual of State pension whilst working abroad.

Where an individual works in the EU, they will pay NICs in the UK if they have a certificate from HMRC. A certificate can be applied for if the person is:

Working in the EU temporarily for up to 2 years

A multi-state worker working in the UK and one or more EU country

A civil servant working for the UK Government

Working onboard a vessel at sea, with a UK flag or

Working as flight or cabin crew where the airline’s home base is in the UK

There are different rules for those working in Iceland, Liechtenstein, Norway or Switzerland.

The Starting (or foundation amount)

Individuals who had not reached their SPA on 6 April 2016 had a starting amount calculated, also known as the ‘foundation amount’. This was ...

Shortened demo course. See details at foot of page.

For those who reach their SPA on or after 6 April 2016, it is still possible to defer taking the State pension. The increase rate has fallen to 5.8% for each full year (1% for each nine week period), though it will no longer be possible to take the deferred amount as a lump-sum payment. The minimum qualifying deferred period has also increased from five weeks to nine weeks, and it is no longer possible for a spouse or civil partner to inherit a deferred new State pension.

Anyone can defer their State pension; it is not conditional on living in the UK.  Where someone normally lives outside the UK the amount they receive when they make a claim will depend on where they live.

Those that live in the EEA, Switzerland or a country that has a social security agreement with the UK (except New Zealand and Canada) are subject to the same rules as the UK.

Those that live in any other country will receive an extra State pension equal to the bigger of:

Their State pension when they reached State pension age or

Their State pension at the date they moved abroad

State Pension forecasts

State Pension forecasts  are issued by the Government. These are useful to understand whether paying Class 3 NICs would be beneficial and useful for those who have been contracted-out in the past to understand the adjustment that’s been made for this.

Applications can be made online: www.gov.uk/check-state-pension.

State how the new State pension usually increases in payment.

Answer : Purchase course for answer

Individuals become entitled to State pension through accumulation of qualifying years of NICs; Class 1 contributions are paid by employees and class 2 are paid by the self-employed (class 4 are also paid by the self-employed but these do not contribute towards the new State pension). A 'qualifying year' for State pension purposes is 52 weeks of Class 1 and/or Class 2 ...

Shortened demo course. See details at foot of page.

Class 3A NICs were only available between 12 October 2015 and 5 April 2017, and only to pensioners who reached State pension age before the introduction of the new State pension on 6 April 2016. Class 3A NICs allowed someone to buy a higher level of Additional State Pension.

Which class of NICs are paid by the self-employed to entitle them to State pension?

Answer : Purchase course for answer

The State provides various death benefits to surviving widows, widowers and civil partners, depending on the circumstances. The benefit(s) provided depends in the first instance whether the spouse or civil partner died before 6 April 2017 or after 5 April 2017. We will only cover those benefits paid if a spouse/civil partner dies on or after 6 April 2017.

Where a spouse or civil partner dies after 6 ...

Shortened demo course. See details at foot of page.

Originally the survivor inherited 100% of their deceased partner’s SERPS entitlement

The inherited SERPS percentage steps down by 10% per year from 100% depending on the date of birth of the deceased

Only 50% of the deceased partner’s S2P entitlement is ever inherited

How much S2P can be inherited by a surviving spouse/civil partner?

Answer : Purchase course for answer

State Graduated Pension Scheme

The State Graduated Pension Scheme (SGPS) was the first State scheme designed to provide an...

Shortened demo course. See details at foot of page.

When did accrual of S2P end?

Answer : Purchase course for answer

The savings credit was withdrawn with the introduction of the new State pension, though it remains available under transitional rules...

Shortened demo course. See details at foot of page.

Ben has savings of £16,000 held in a deposit account. How much income will these savings be deemed to provide for Ben to calculate Pension Credit entitlement?

Answer : Purchase course for answer

Estimated stud...

Shortened demo course. See details at foot of page.