7 - The State Pension

Question 1

Can people still claim the old state pension?

Answer 1

Yes

Question 2

How many years NI to receive full state pension? How many yes to receive the min. state pension?

Answer 2

35yrs

Min. required of 10yrs

Question 3

How is state pension paid?

Answer 3

Pay as you go basis - People now paying NI are paying for state pension now

Question 4

NI contributions:

Class 1
Class 2
Class 3
Class 4

Answer 4

Class 1 - employed
Class 2 - self employed
Class 3 - voluntary
Class 4 - self employed

Question 5

How often is the state pension age reviewed and possible change for everyone in the UK?

Answer 5

Every 6yrs

Question 6

How do you claim your state pension? And who do you apply to?

Answer 6

Complete a form and send it to DWP. Should receive a letter 4 months prior reminding you to claim this.

Question 7

2 ways to know state pension entitlement

Answer 7

Go on Gov.uk and check

Or

Complete a BR19 form and a statement will be issued within 10 days

Question 8

Is state pension income taxable?

Answer 8

Classed as earned income however other income is taxed via:

• adjustment in tax code
• PAYE system
• self assessment

Question 9

• what if non UK resi. and receive state pension?

Answer 9

If double taxation rule applies - No UK tax and subject to other country tax rules

If no double taxation rule applies - Will pay UK tax and may pay tax in other country also

Question 10

How is old state pension & single tier pension inflation proofed?

Answer 10

Triple lock system - Will rise by higest of:

• National average earnings index
• CPI
• Fixed rate of 2.5%

Question 11

What dates does triple lock system check dates run from?

Answer 11

July to July for earnings

September to September for CPI

Then applies to the following April

Question 12

Can state pension be paid if you live abroad?

Answer 12

Yes, but only receive escalation increases if:

• live in UK min. of 6months a yr
• reside in EEA state or Switzerland
• reside in a country with a DWP agreement

Otherwise will receive base state pension with no triple lock increases

Question 13

Can you defer state pension payments? And why? (2)

Answer 13

Yes, as can then either:

• receive higher state pension in the future

Or

• take a cash lump sum in the future

Question 14

How many times can you choose to defer state pension?

Answer 14

Once

Question 15

Rules for deferring state pension pre 6th April 2016

Answer 15

Higher future income:
- min. deferred period of 5 weeks
- increase in payment of 0.2% per month
- taxed as usual earned income

Lump sum in leiu:
- min. deferred period of 1yr
- lump sum equates +2% interest above BoE base rate
- taxable at lowest tax rate band

Question 16

Rules for deferring state pension post 6th April 2016

Answer 16

Lump sum in leiu option removed

Higher future income:
- min. deferred period of 9 weeks
- increase in payment of 1%pw for each 9 week period
- taxable as usual earned income

Question 17

Bereavement support payment (On exam tax tables)

Answer 17

Survivor has children under 20 in full time education:
- £3,500 lump sum
- £350pm for 18 months

Survivor does not have children under 20 in full time education:
- £2,500 lump sum
- £100pm for 18 months

Question 18

Does Bereavement support payment have an effect on other benefit payments?

Answer 18

No

Question 19

Must meet what requirements to receive Bereavement support payment? (4)

Answer 19

• paid NI for 25 weeks in any tax yr
• died due to work
• was under SPA
• claimant not in prison

Question 20

Inherited state earnings related pension (SERPS) limits

Answer 20

100% men born before - 6/10/37
50% men born on or after - 6/10/45

100% women born before - 6/10/42
50% women born on or after - 6/7/50

Question 21

Inherited state second pension (S2P) limits

Answer 21

Set amount of 50% of entitlement

Question 22

Pension credit purpose (2) & end date

Answer 22

Ensure min. level of income beyond SPA

Reward individuals who have saved more towards retirement

No longer available for people reaching SPA from 6th April 2016

Question 23

Is pension credit means tested?

Answer 23

Yes, so more income you have the less pension credit you will receive

Question 24

Excluded (CCHAD) and partly excluded income for pension credit

Answer 24

Excludes: (CCHAD name Chad)
- disability benefits
- attendance allowance
- housing benefit or residency orders
- child benefits or maintence
- charity payments

Partly excludes:
- £10 of total income from any widow or civil partner pensions
- £20 of each payment from a tenant or sub tenant
- any interest costs or equity release schemes

Question 25

Included capital for calculating total income to figure out pension credit entitlement

Answer 25

First £10k of capital is disregarded then:

• All cash deposits and investments included minus any mortgages or loans

Question 26

How is weekly income calculated from capital for pension credits

Answer 26

After first £10k, for every £500 then £1 of weekly income is generated

Question 27

What is guaranteed income when in pension age?

Answer 27

Guaranteed level of income where if below will receive top-up of guaranteed credit and if above this then will receive nothing

Question 28

Savings credit

What if we’re a couple?

Is this still available?

How would savings credit reduce if had high amount of savings?

Answer 28

Would receive if fall between guaranteed credit threshold and savings credit threshold then

Only one have to meet requirements if a couple

No longer available

For every £1 over guaranteed credit level a debit of 40p would be applied until savings credit was £0. So will start to reduxe from £6k and be £0 at £16k

Question 29

How much is state pension per year in 24/25?

Answer 29

£11,466.24