State Schemes Flashcards
Q: How is the State Pension determined for individuals who reached their State Pension Age (SPA) before 6 April 2016?
A: Individuals who reached their SPA before 6 April 2016 receive a State Pension based on the pre-6 April 2016 rules, comprising of a Basic State Pension (BSP) and possibly an Additional State Pension.
Q: Between 6 April 2010 and 6 April 2016, what were the qualifications for receiving the full Basic State Pension (BSP) or a Category A pension?
A: Individuals qualified for the full BSP or a Category A pension if they had at least 30 ‘qualifying years’.
Q: Who can claim a ‘Category B’ pension and under what conditions?
A: A dependant, which may be a husband, wife, or civil partner, who reached SPA with less than 18 qualifying years, being entitled to less than 60% of the full BSP in their own right, may have been able to claim a ‘Category B’ pension.
Q: What does eligibility to the Category B State Pension depend on?
A: Eligibility to the Category B State Pension is dependent upon the qualifying years achieved by the individual’s spouse or civil partner.
Q: What components could the Additional State Pension include for individuals who reached their SPA before 6 April 2016?
A: It could include the Graduated Retirement Benefit (GRB) accrued between 6 April 1961 and 5 April 1975, the State Earnings Related Pension Scheme (SERPS) accrued between 6 April 1978 and 5 April 2002, and the State Second Pension (S2P) accrued between 6 April 2002 and 5 April 2016.
Q: How is the State Pension determined for anyone who reaches their SPA on or after 6 April 2016?
A: Individuals who reach their SPA on or after 6 April 2016 receive the new State Pension.
Q: How many qualifying years do individuals need to receive any State Pension, and how many to receive a full new State Pension, after 6 April 2016?
A: Individuals need a minimum of ten qualifying years to receive any State Pension and at least 35 qualifying years to obtain a full new State Pension.
Q: How is the starting amount for the State Pension calculated for individuals who had not reached their SPA on 6 April 2016?
A: It is calculated as at 5 April 2016 and is the higher of either their entitlement under the pre-6 April 2016 State Pension rules or their entitlement under the new State Pension, as if the new State Pension had been in place at the start of their working life.
Q: What is a protected payment in the context of the State Pension?
A: When an individual’s starting amount is higher than the full amount of the new State Pension in 2016/17, the difference between their starting amount and the new State Pension is called their protected payment.
Q: Why does the Government issue new State Pension forecasts, and who can benefit from them?
A: The Government issues new State Pension forecasts to help individuals understand whether paying Class 3 NICs would benefit them and for those who have been contracted out to understand how much ‘adjustment’ has been made in respect of this.
Q: How is entitlement to the new State Pension accumulated for employees and the self-employed?
A: Entitlement to the new State Pension is accumulated through Class 1 NICs for employees and Class 2 NICs for the self-employed.
Q: Under what conditions can an individual receive credits towards their Class 1 or Class 3 NIC record?
A: An individual may receive credits towards their Class 1 or Class 3 NIC record if they satisfy certain conditions.
Q: What are Class 3 NICs and who can benefit from them?
A: Class 3 NICs are voluntary and can be paid by those with an inadequate NIC record, allowing the individual to increase their entitlement to the new State Pension or to the Basic State Pension for those who reached their SPA prior to 6 April 2016.
Q: By what measure are the new State Pension and the Basic State Pension increased each year?
A: They are increased by the higher of earnings, measured by NAE, prices, and 2.5%, referred to as the ‘triple lock’.
Q: How are increases in other State Pension benefits (not including the New State Pension) and the revaluation of protected payments determined?
A: Increases in other State Pension benefits like GRB, SERPs, S2P and the additional pension purchased through Class 3A NICs, as well as the revaluation of protected payments, are based on the change in the Consumer Price Index (CPI). They do not benefit from the triple lock.
Q: Can State Pension be deferred under both the pre-6 April 2016 and post-6 April 2016 rules?
A: Yes, State Pension can be deferred under both the pre-6 April 2016 and post-6 April 2016 rules.
Q: What options are available for those who reached SPA before 6 April 2016 when deferring State Pension, and what about those reaching SPA on or after 6 April 2016?
A: Those who reached SPA before 6 April 2016 can defer for an increased income or a lump sum, whereas those who reach SPA on or after 6 April 2016 cannot defer for a lump sum.
Q: How is tax applied to the State Pension?
A: Tax is never deducted directly from the State Pension, but it is a taxable benefit and is treated for tax purposes as pension income.
Q: Can the UK State Pension be paid to individuals living abroad and do they receive the annual increases?
A: Yes, the UK State Pension can be paid to someone living abroad, but whether they receive the annual increases depends on their country of residence.
Q: What is the current State Pension Age (SPA) for men and women, and when is the next scheduled increase?
A: Currently, the SPA for men and women is 66, and it will increase to 67 between 2026 and 2028.
Q: What benefits may be available to a survivor whose spouse or civil partner dies on or after 6 April 2017?
A: The survivor may be eligible for either the standard or higher rate of Bereavement Support Payment.
Q: Who is eligible for the higher rate of Bereavement Support Payment, and who receives the standard rate?
A: The higher rate of Bereavement Support Payment is payable to claimants who are pregnant at the time of their spouse/civil partner’s death or who are entitled to receive child benefit. The standard rate is paid to all other claimants.
Q: Is it possible for a surviving spouse or civil partner to inherit any entitlements to SERPS or S2P after the death of their partner, and if so, how much?
A: Yes, a surviving spouse or civil partner can inherit some or all of any entitlement to SERPS or S2P that the deceased had.
Q: What is the purpose of the State Pension Credit?
A: The State Pension Credit is a means-tested benefit designed to provide a minimum level of income in retirement.
Q: What are the two aspects of the State Pension Credit?
A: The State Pension Credit has two aspects: the Guarantee Credit and the Savings Credit.
Q: Is Savings Credit available to those who reach their State Pension Age (SPA) on or after 6 April 2016?
A: No, Savings Credit is no longer available for those who reach SPA on or after 6 April 2016.
Q: What was the required percentage of ‘working life’ qualifying years needed to qualify for the full BSP for those who reached SPA before 6 April 2010?
A: 90% of their ‘working life’.
Q: How many working life years was considered for a male who reached SPA before 6 April 2010?
A: 49 years.
Q: How many working life years was considered for a female who reached SPA before 6 April 2010?
A: 44 years.
Q: What was the minimum qualification period, as a percentage, of the maximum amount to receive any BSP?
A: 25% of the maximum amount.
Q: How many qualifying years did a male need to have to receive any BSP?
A: Eleven qualifying years.
Q: How many qualifying years did a female need to have to receive any BSP?
A: Ten qualifying years.
Q: For couples (either married or in a civil partnership) where both reached SPA before 6 April 2016 and have at least 30 qualifying years, how much BSP do they each receive per week for the year 2023/24?
A: £156.20 per week.
Q: Which individuals who reached SPA before 6 April 2016 may have qualified for a Category A pension?
A:
1. A divorcee who can use the qualifying years of their former spouse.
2. A widow who is not entitled to a Widow’s Pension or bereavement benefits.
3. A widow or widower entitled to long-term incapacity benefit.
Q: Who qualifies as a dependant for the Category B pension?
A: A husband, wife, or civil partner.
Q: How many qualifying years must a dependant have reached SPA with to be considered for a ‘Category B’ pension?
A: Less than 18 qualifying years (i.e., they were entitled to less than 60% of the full BSP in their own right).
Q: What is the full rate of Category B pension for 2023/24?
A: £93.60 per week.
Q: Under what circumstances is the full rate of Category B pension paid?
A: It’s only paid where the spouse or civil partner, whose NIC record was being used, was entitled to a full Category A pension when they reached their SPA (which had to be before 6 April 2016).
Q: How is the Category B pension adjusted if the spouse or civil partner was not entitled to the full Category A pension?
A: The Category B pension would be reduced proportionately. For instance, if they were only entitled to 90% of the full Category A pension, then the maximum Category B pension payable would be 90% of the maximum.
Q: If someone was entitled to 90% of the full Category A pension, how much Category B pension would they get in 2023/24?
A: 90% × £93.60.
Q: Can someone who reached SPA before 6 April 2016 receive both a Category A and Category B pension?
A: Yes, it is possible for someone to receive both a Category A pension and a Category B pension.
Q: Which individuals might be entitled to receive the Additional State Pension?
A: Individuals who reached their SPA before 6 April 2016.
Q: What are the three components of the Additional State Pension?
A:
1. Graduated Retirement Benefit (GRB) - accrued between 6 April 1961 and 5 April 1975.
2. State Earnings Related Pension Scheme (SERPS) - accrued between 6 April 1978 and 5 April 2002.
3. State Second Pension (S2P) - accrued between 6 April 2002 and 5 April 2016.
Q: On what basis was eligibility for GRB and SERPS determined?
A: Based on the Class 1 NICs paid by employees.
Q: On what basis was eligibility for S2P determined?
A: Based on Class 1 NICs paid by employees and credits for Class 1 NICs received by those claiming certain benefits.
Q: Were any of the Additional State Pension schemes available to the self-employed?
A: No, none of these schemes was available to the self-employed.
Q: How does the Additional State Pension change each year?
A: It increases based on increases in CPI (Consumer Price Index).