THE UK STATE PENSION – WHO IS ELIGIBLE?

Eligibility for UK State Pension

To be eligible for a UK state pension, you need to have been employed or self-employed in the UK and/or have made National Insurance Contributions for a certain minimum number of years (which could include voluntary contributions or time spent in child care).

These years of National Insurance contributions are referred to as “qualifying years”. Depending on your age, the number of years that you need to qualify for a minimum pension will vary. There are three main groups of pensioners. 

To see where you stand with regard to your pension, place yourself in one of three categories that may apply:

1)  Men born before 6th April 1945 and women born before 6th April 1950

These people reached pension age (65 for a man and 60 for a woman) before 6th April 2010.  A man needs a minimum of 11 years National Insurance contributions and a woman needs a minimum of 10 years National Insurance contributions to get any pension at all.  It is too late for people in this age group to make any extra payments, but there may be some credits for years of education, apprenticeship or training from age 16 onwards.

2) Men born on or after 6th April 1945 and before 6th April 1951. Women born on or after 6th April 1950 and before 6th April 1953

Men in this group reach pension age at 65.  Women reach pension age somewhere between 60 and 63 (as the pension age is steadily rising to match that for men).  People in this group get some pension for every year of National Insurance contributions.  A full pension requires 30 years’ contributions, and one year gets 1/30th of a full pension which currently stands at £126 per week. Between two and seven voluntary contributions can be made to top-up your contributions depending on your pension date.

3) Men born on or after 6th April 1951 and women born on or after 6th April 1953

The pension age for men in this age group is steadily increasing, starting at 65 for men and 63 for women.

People in this group reach pension age on or after 6th April 2016, and will need a minimum of 10 years’ National Insurance contributions. 35 years are needed to get a full pension of about £160 per week.  Also you can make a minimum of 10 voluntary payments to top up your pension contributions.

Voluntary contributions are a very good investment.  The usual Class 3 contribution costs about £700 for each year purchased, and this is recouped in under 4 years once your pension starts.  The Class 2 contribution, usually available to people who are working, costs only £143 for each year, and is recouped within the first year of pension.  You must have worked 3 years in the UK, or lived in the UK for 3 continuous years to qualify. The Class 2 option is being cancelled by the Government effective April 2019

A partial pension is simply prorated based on the number of qualifying years you have. For example, if you have 10 qualifying years, then you would be eligible for a pension equal to 1/3 of the full pension amount. For 2017, the full UK state pension is £8.112 per annum.

These qualifying years provide what is known as a Category A Pension. In addition, the spouse or civil partner of someone receiving a Category A pension may be entitled to receive a Category B pension, even if they have never worked in the UK, lived in the UK, or even visited the UK themselves. The Category B pension is based on a percentage of the Category A pension being received by the main pensioner, (approximately 60%).

HOW DO THESE CHANGES AFFECT WHAT I SHOULD DO NOW?

If you will reach pensionable age after 2016, you will need a minimum of between 7 and 10 years of contributions to qualify for any pension. That means it is critical to find out as soon as possible how many years you already have accumulated, plus how many voluntary contributions you can make to bring you up to at least that total.

Don’t delay getting that information !

Become a CABP member, support our fight and we will

show you how to get this critical information !

CAN I INCREASE MY PENSION AMOUNT?

Can I increase my state pension amount?

Yes! If you have not yet reached retirement age, you can make voluntary contributions going forward to purchase additional qualifying years, up to the point that you reach your pensionable age. You may also be able to buy back previous years, even if you have already reached retirement age!  Both of these actions will increase the pension you receive.

The cost of making a voluntary contribution for 1 year depends on your circumstances, but in 2016 it was either £145.60 or £733.20. We can explain in more detail how you might be eligible to make voluntary contributions at the lower rate. Based on 2016 pension rates, 1 extra qualifying year is worth £206 annually in increased pension, so it could be very financially attractive to purchase additional qualifying years, especially at the lower rate.

For most Canadians the UK pension will not affect the amount of CPP and OAS received. However it will affect the amount of any GIS you receive, and if you have net taxable income over $71,000 there could be some clawback from your OAS.

Become a CABP member, support our fight and we will show you how to make voluntary contributions

WHEN DO I REACH PENSIONABLE AGE?

Like many countries, the UK is gradually raising the age at which you become eligible. For males, the pension age will increase to 66 by 2020. For females it will increase to 65, by 2018, and then 66 by 2020.

We can let you know the exact date you will reach retirement age, during this transition period 

 

IS PENSION LEGISLATION CHANGING?

Is UK pension legislation changing?

Yes! In January 2013, the UK Government introduced a White Paper set of proposals to make significant changes to the pension system. These proposals are expected to undergo more changes before becoming law. They will only affect people who reached pensionable age after April 2016. People who reach pensionable age prior to that are not affected. The White Paper is very long and complicated, but the main impact for people in Canada is

  • The amount of the basic pension will increase by approx. 30%

  • A minimum of 10 years of contributions will now be required to be eligible for any pension, instead of 1

  • 35 years of contributions will be needed to get the maximum pension payout, instead of 30

  • Spousal pensions will no longer be allowed

If you reached pensionable age after 2016, you will need a minimum of 10 years of contributions to qualify for any pension. That means it is critical to find out as soon as possible how many years you already have accumulated, plus how many voluntary contributions you can make to bring you up to at least that total, so that you do not lose out

Don’t delay getting that information !