An Introduction To Pensions In The UK

A happy elderly couple at home

The state pension is a regular income which is paid by the government for those who have retired and are no longer able to work. Every April the amount that retired people get increases in line with rises in the cost of living (CPI), average wage increases or by 2.5% (whichever rate is the highest). Annual state pension payments are lower than the Personal Allowance of £11,850 set by HMRC so pensioners would only be eligible to pay tax if they have another source of income. In this article we examine:

  • How the state pension is calculated
  • How much the UK state pension is
  • When do you get your state pension?
  • Retiring early and state pensions

How is the state pension calculated?

The amount that retirees receive depends on how many National Insurance contributions they’ve made over their working life. Workers who have gaps in their employment record (to bring up children, for example) receive NI credits which count towards their final pensions.

Workers with gaps in their employment  record are eligible to receive NI credits

There have been recent changes in the UK’s state pension system which will affect those born on/after 6th April 1951 (for men) or 1953 (for women). For the new state pensions, people have to have at least 10 qualifying years. Also, the number of qualifying years for a full pension has risen from 30 to 35 years.

How much is the state pension in the UK?

Under the old system, the basic UK state pension is £125.95 for a single person and double that for a couple who are married or in a civil partnership (£251.90). For the 2019-20 tax year, this is due to rise to £129.20 a week per person.

A couple are meeting with a financial adviser to discuss their pensions

Under the new state pension, the maximum state pension a single person can receive is £164.35 per week, which will increase to £168.60 in April 2019.

When will I get my state pension?

Apart from altering the way pensions are calculated, there have also been changes in the State Pension Age (SPA). Although the SPA for men has always been 65, the retirement age for women has steadily increased to 65 since 2010. Further increases are gradually being implemented for both men and women. These are:

  • Oct 2020 – SPA at 66 years old.
  • 2026-28 – SPA at 67.
  • 2037-39 – SPA at 68.

The age you’ll be eligible for a state pension depends on when you were born. There is an online calculator []to find out exactly when you can apply.

Can I retire at 60 and claim a state pension?

You are of course allowed to retire at any age, but this doesn’t necessarily mean you’ll be entitled to a state pension. In situations of extreme ill-health (and especially a terminal diagnosis), you might be able to claim your state pension as early as 55 or younger. However, you must provide the necessary medical documentation.

How can you claim a state pension?

Claims for a state pension can be made by phone, or you can download a form from the site and take it to your local pension centre. Recipients of the new state pension also have the option to apply online through their Government Gateway account.

About the author

Oliver Stedman

Oliver is a retired teacher who spends his time doing volunteer work as well as sharing valuable lessons on

Oliver takes great pride in his cooking and also likes birdwatching while going for long strolls.

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