New state pension: a brief guide
Simon Osborne provides answers to some basic questions about the new state pension. For full details, see Chapter 36 of CPAG’s Welfare Benefits and Tax Credits Handbook.
Who can claim the new ‘state pension’?
Those reaching pension age on or after 6 April 2016. In effect, currently this means a man born on or after 6 April 1951, or a woman born on or after 6 April 1953.
Those who reached pension age before 6 April 2016 cannot claim the new state pension, but may be entitled to one of the ‘old’ retirement pensions – eg, a Category A retirement pension. This applies even if the person reached pension age before 6 April but deferred claiming until after that date. ‘Old’ retirement pensions are not affected by the new state pension.
How much is it?
Like ‘old’ retirement pensions, the new state pension is non-means tested. There is a full rate, which in 2016/17 is £155.65 a week. This is a flat rate: there is no additional state pension or increases for adult or child dependants.
However, many will not get the full rate. There is a requirement of a minimum 10 ‘qualifying years’ of sufficient national insurance (NI) contributions for any entitlement at all. Ultimately, for those whose qualifying years are all after 6 April 2016, there is a requirement for a minimum of 35 qualifying years to get the full rate.
Those who defer claiming the new state pension later become entitled to a higher rate with the increase calculated by formula – eg, deferral for one year increases the full rate by approximately 5.8 per cent.
For those who have all or some qualifying years from before 6 April 2016 and have at least 10 qualifying years, there is a ‘transitional rate’. In essence, this ensures a state pension of at least as much as the claimant would have been entitled to under the ‘old’ retirement pen- sion rules. If the claimant would have been entitled to a substantial additional pension under those rules, the new state pension may well exceed the ‘full’ rate of new state pension.
Special transitional rules apply for some married women and widows who applied (by May 1977) to pay reduced rate NI contributions (the ‘married woman’s stamp’), and for some widows, widowers and surviving civil partners.
What about claiming and getting paid?
The rules are very similar to those that apply to the ‘old’ retirement pensions.
The new state pension is administered by the Pension Service of the DWP. Claims must usually be made for entitlementto arise (except for some widows), although claims can be backdated for up to 12 months. It is paid in much the same way as the ‘old’ retirement pensions are.
Is it taxable?
State pension is taxable.
How does it affect other benefits and tax credits?
Again, the rules are very similar to ‘old’ retirement pensions. It is taken into account as in-come for means-tested benefits and as ‘pension income’ (ie, partially) for tax credits. It ‘overlaps’ with some earnings-replacement benefits, in particular carer’s allowance. State pension is not taken into account when applying benefit cap rules. Recipients qualify for a Christmas bonus.
Official information can be found at www.gov.uk/government/publications/your-new-state-pension-explained
See also CPAG’s Welfare Benefits and Tax Credit Handbook.
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