Will You Get The Full Flat State Pension?

The new flat rate state pension is now confirmed as starting in 2016 – but confusingly, not everyone qualifies for the full amount.

Someone approaching retirement could be forgiven for thinking that they will pick up the index-linked equivalent of £144 per week in 2013-2013, but unfortunately, not everyone will get what they expect.

Anyone retiring before April 2016 will receive a state pension based on the current rules.

To receive the full single tier pension, someone will have had to ban 35 years of working on full National Insurance Contributions (NIC) or credits. The current state pension is based on 30 years NIC.

To receive any single tier pension payments, someone will have to have a minimum of seven to 10 working years banked. The number will be set when the bill making the single tier pension law has passed through Parliament.

Banking worked years

Assuming the limit is set at 10 years, anyone with between 10 and 35 banked working years will receive a pro rata state pension.

So, someone with 20 years of banked working years will be paid 20/35ths of the full pension amount – which works out as £144 divided by 35 years x 20 years, which equals £82.28.

No extra cash or benefits are awarded for having more than 35 years of banked working years.

For the self-employed, any NIC paid will count towards banked working years, although the draft legislation is again unclear whether the self-employed NIC rate will change. The self-employed can buy extra qualifying years by making extra contributions.

Many taxpayers receive letters from HM Revenue and Customs asking for NIC payment top-ups that can run in two or three thousand pounds for a tax year.

Triple lock promise

If the 35 working years have already been banked, there is little point in paying this extra cash as no extra pension benefits are available. However, payments like funeral payments. However, these generally only apply to those on low incomes.

Funeral payments include:

  • Burial and cremation fees cremation fees
  • Up to £700 for funeral expenses like funeral director’s fees, flowers, coffin
  • Travel to arrange or go to the funeral
  • Costs of moving a body within the UK – but only for the part of the journey that’s over 50 miles

If the deceased had a pre-paid funeral plan, funeral payments will only cover expenses not included in the plan.

Another point to watch is the government’s pension triple lock promise – the bill before Parliament only talks about increasing the single tier pension each year  in line with average earnings and says nothing about inflation or a minimum 2.5% hike.

1 thought on “Will You Get The Full Flat State Pension?”

  1. One issue that this article does not include is that if you decide to move overseas, you may choose a Commonwealth country where your pension will be frozen at the rate it is when you first receive it. This can mean that over the years, the value drops to a point where it is negligible. The International Consortium is fighting this random injustice suffered by over half a million British pensioners, most of whom live in Commonwealth countries.


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