09. State pensions & individual's pension planning Flashcards

1
Q

What types of pensions could someone reaching SPA before 6 April 2016 potentially receive?

A

Basic state pension and possibly Additional State Pension(s).

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2
Q

What is a full single person’s BSP for 2023/24?

A

£156.20 p.w.

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3
Q

How many qualifying years did someone who reached SPA before 6 April 2010 need?

A

Years equalling 90% of their ‘working life’, where working life was:

  • 49 years for men.
  • 44 years for women.
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4
Q

For those reaching SPA before 6 April 2010, what was the minimum qualification period to receive BSP?

A

25% of the maximum amount, i.e. 11 years for men (49 x 25%) and 10 years for women (44 x 25%).

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5
Q

From what dates could a person qualify for the full BSP (Category A pension)?

A

From 6 April 2010 to 6 April 2016.

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6
Q

BSP (Category A) pensions started after how many years of NICs?

A

1 year.

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7
Q

How many qualifying years are required to earn the maximum BSP?

A

30.
Each year provides 1/30th of full pension.

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8
Q

Name 2 alternative individuals who reached SPA before 6 April 2016 that may qualify for a Category A pension.

A
  • Divorcees using qualifying years of their former spouse.
  • Widows/widowers not entitled to a Widow’s Pension or bereavement benefits, or entitled to long-term incapacity benefit.
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9
Q

Who might receive Category B pensions and under what conditions?

A

Dependants of those who were entitled to Category A pensions who reached SPA with less than 18 qualifying years, e.g. non-working spouses.

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10
Q

Who were the Additional State Pension schemes not available to?

A

The self-employed.

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11
Q

Name the 3 Additional State Pensions and when they applied.

A
  • Graduated Retirement Benefit (GRB): 1961 - 1975.
  • State Earnings Related Pension Scheme (SERPS): 1978 - 2002.
  • State Second Pension (S2P): 2002 - 2016.
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12
Q

How were the Additional State Pension schemes increased?

A

By CPI (not the triple-lock).

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13
Q

What was ‘contracting out’ and why was it done for both DB & DC schemes?

A
  • Forsaking additional pension benefits.
  • For a reduction in NICs (DB).
  • For an equivalent being paid into a separate personal arrangement (DC).
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14
Q

What will those who reach SPA after 6 April 2016 receive?

A

The new State Pension, a.k.a. ‘single-tier State Pension’.

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15
Q

What are the minimum qualifying years to receive the NSP?

A

10.

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16
Q

How many qualifying years are need to receive the full NSP?

A

35.
Each year provides 1/35th of full pension.

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17
Q

How much is the full NSP for 2023/24?

A

£203.85 p.w.

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18
Q

How was the starting / foundation amount calculated?

A

A one-off calculation which worked out higher of:

  • entitlement under BSP rules with top-ups and;
  • entitlement if NSP had been in place all along.
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19
Q

When calculating the starting / foundation amount, what rate of NSP for 2016/17 was used?

A

£155.65 p.w.

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20
Q

If individuals were entitled to more than the NSP due to the top-ups, what did they receive?

A

A protected payment.

21
Q

Who was likely to receive:

  • more than the NSP?
  • exact NSP?
  • less than the NSP?
A
  • Employees contracted-in for most of their working life.
  • Self-employed with 35 years of NICs.
  • Employees contracted-out for most of their working life and newbies.
22
Q

On what basis is the State Pension funded?

A

On a ‘Pay as you go’ basis.

23
Q

Which NIC class does not contribute to State Pension entitlement?

A

Class 4.

24
Q

An individual may receive credits towards their Class 1 or Class 3 NIC record if they receive certain ~~.

A
  • State benefits.
25
Q

Within how many years of the tax year in which the shortfall occurred does an individual have to pay Class 3 NICs to cover gaps in their NIC record?

A

6 years.

26
Q

Class 3A NICs do not increase the number of qualifying years but instead allow an individual to purchase what?

A

A higher level of Additional State Pension.

27
Q

How does the triple-lock work?

A

NSP is increased to higher of:

  • National Average Earnings Index.
  • CPI.
  • 2.5%.
28
Q

Regarding the triple-lock, when is the change in weekly earnings measured?

A

Over a 12 month period ending in the previous July.

29
Q

Regarding the triple-lock, when is the change in prices measured?

A

Over a 12 month period ending in the previous September.

30
Q

State Pension (under both the pre & post 6 April 2016 rules) deferrals can occur at ~~ but can only occur ~, provided you reside in the ~.

A
  • any point
  • once
  • EEA.
31
Q

Deferral will mean ~ benefits when taken.

A

higher

32
Q

Deferral rules when SPA reached pre 6 April 2016 (i.e. BSP).

  • Minimum deferral period of ~~.
  • Extra income of ~ for each ~~ deferred.
  • How long do you need to defer for to receive a lump-sum payment?.
  • At what rate are lump-sum based on deferred payments with compound interest added at?
  • Partners ~~ deferred benefits.
  • Deferred lump-sum payment will not move what?.
A
  • 5 weeks.
  • 1% / 5 weeks (equates to 0.2% p.w. and 10.4% p.a.)
  • 12 months.
  • 2% above BoE base rate.
  • can inherit
  • Tax bands.
33
Q

Deferral rules when SPA reached post 6 April 2016 (i.e. NSP).

  • Minimum deferral period of ~~.
  • Extra income of ~ for each ~~ deferred.
  • Can you defer and receive a lump-sum?
  • Maximum inheritance is up to ___.
A
  • 9 weeks.
  • 1% / 9 weeks (equates to just under 5.8% p.a.)
  • No.
  • 3 months of arrears (cannot inherit).
34
Q

All State pension provision is paid ~ and is liable to ~~.

A
  • gross
  • income tax.
35
Q

Name 3 criteria for payments overseas?

A
  • In the UK for 6m+.
  • In EEA, Gibraltar or Switzerland.
  • Reciprocal social security agreement with UK.
36
Q

What age is SPA forecast to increase to?

And when? (Range)

A
  • 67
  • 2026 and 2028.
37
Q

What is the BR19 form used for?

A

When looking for a state pension forecast.

38
Q

When did Bereavement Support Payments become available?

A

6 April 2017.

39
Q

What are the 2 criteria for receiving Bereavement Support Payments?

A
  • Deceased spouse/cp must have paid Class 1 or 2 NICs for 25+ weeks in any one tax year prior to death or death must be due to their job.
  • Surviving spouse/cp must be under SPA and living in UK or country that pays bereavement benefits.
40
Q

What are the 2 rates of Bereavement Support Payment and when do they apply?

A
  • Higher rate: £3,500 initial payment, £350 p.m. max. 18 months.
  • Standard rate: £2,500 initial payment, £100 p.m. max. 18 months.
  • Higher rate for those pregnant or on Child Benefit.
41
Q

Bereavement Support Payment time limits:

  • To receive all payments.
  • Where claim after this time, payments can be backdated for max.
  • To receive initial payment only.
  • Receive nothing.
A
  • 3 months after death.
  • 3 months.
  • Between 3 to 12 months
  • Over 12 months.
42
Q

A spouse/cp can inherit up to ~ of a protected payment on death.

A

50%

43
Q

What is the State Pension Credit and what is it’s purpose?

A
  • A means-tested welfare benefit.
  • To provide a minimum level of income (tax-free) in retirement.
44
Q

What are the 2 elements of State Pension Credit?

A
  • Guarantee Credit.
  • Savings Credit.
45
Q

What is the rule regarding who receives Guarantee Credit.

A

All parties must have reached SPA.

46
Q

What social security benefit is assessed as income when testing for Guaranteed Credit entitlement?

A

Carer’s Allowance.

47
Q

For whom is Savings Credit still available?

A

Those who reached SPA pre 6 April 2016 and are in receipt of savings credit at that time.

48
Q

When calculating income to work out Pensions Credit entitlement, savings are deemed to provide ~ for every ~ of savings in excess of ~ (round up).

A
  • £1
  • £500
  • £10,000