The state pension may only cover the basics, but the payment still accounts for a large part of most people’s retirement income.
At £159.65 a week index linked for life for every new retiree from April 2017, the state pension contributes significantly to annual income and will continue to do so for many years.
On average the state pension is worth around 43% of average income for retirees.
In perspective, that’s a real worth drop of almost a third from 1979, when the state pension was 61% of retirement income.
The state pension is paid to 97% of British households – including to hundreds of thousands of expats overseas.
Qualifying for the full pension
The new flat rate pension which started in April 2016 was promised as fairer, but rule changes introduced at the same time have caused dismay to some people who expected more money earlier than they are likely to get.
The old state pension paid out the full amount once a worker had contributed 30 years of national insurance contributions.
The sick, mothers looking after children and others were given credits for the years that they could not make contributions.
The new rules still allow credits, but to qualify for the full state pension, 35 years of national insurance contributions are needed.
For those with less than 35 years of contributions, the state pension they receive is reduced pro rata.
Expats claiming from overseas
For example, someone with 30 qualifying years receives 30/35 of that year’s weekly payment – £136.84 a week for the 2017-18 year.
Some people who contracted out in earlier years may receive more than the £159.65, depending on their pension arrangements.
Expats can claim the state pension in the same way as UK residents.
However, the rules freeze the payment at the amount first received if they live in a country without a reciprocal social benefits agreement with the UK.
These are mostly countries outside of Europe, with a few exceptions, but many favourite long-haul expat destinations, such as Australia, Canada, New Zealand and South Africa are missing off the list.
