The State Pension is a regular payment from the Government based on your previous National Insurance contributions. It applies to anyone who has enough qualifying years from their National Insurance (NI) contributions.
There are two different systems for claiming State Pension.
As of 2021, the maximum basic State Pension is £137.60 a week. Use the State Pension profiler to estimate how much you can collect and when.
State Pensions after Brexit
Entitlement to the UK State Pension is based on an individual's UK National Insurance record. As former member of the EU, the UK was part of a system to coordinate the social security entitlements for people moving within the EU. The rules also apply to the EEA and Switzerland. Now that the UK has left the European Union (EU), new rules might affect your private pension, State Pension, or annuity. The EU Withdrawal Agreement sets out the terms of the new UK's withdrawal from the EU. This guidance is for UK nationals, however these rules on the State Pension apply to everyone regardless of your nationality and regardless of when you moved.
With the new agreement you can carry on receiving your UK State Pension if you move to live in the EU, EEA or Switzerland and you can still claim your UK State Pension from these countries. Moreover, you can also count relevant social security contributions made in EU countries to meet the qualifying conditions for a UK State Pension.
For more detailed and specific request, we recommend you to speak to an adviser. If you do not have one, you can find it on the Unbiased website (they may charge for their service).
Currently, the State Pension age is 66 years old (pension age is set to increase from 66 to 67 between 2026 and 2028.). However, you can keep working after you reach State Pension age, since ‘Default retirement age' (a forced retirement age of 65) no longer exists.
If you put off claiming State Pension, you can earn:
You can do this by working past the State Pension age, or by stop claiming benefits after having claimed it for a period.
Most of the people get a state pension from the government which helps you cover basic necessities, but it is also recommended trying to save some extra money in a pension fund, to give you a decent standard of living. There are different types of company pension plans or occupational pensions available. Workplace pension plans usually require you to make a regular contribution based on a percentage of your salary. You receive tax relief on the money paid into the pension.
Your employer may also make contributions to your pension through the scheme. If you are eligible for automatic enrolment, your employer has to make contributions into the scheme.
Though it depends on the company, there are generally two types: a salary related or money purchase scheme.
It does not include the performance of any stock market or other investments you might own.
This means, that the final pension amount can fluctuate in value. Therefore, the value of benefits payable are not known in advance and the member bears the investment risk.
It is a great investment in your future to set-up a personal pension plan to supplement the income you receive from a state pension. Anyone can set one up whether they are employed, self-employed or not working. Private pensions are available from banks, building societies and life insurance companies. Once it is established, you can control how much money you pay into it.
A personal plan does not affect basic State Pension but may reduce the amount of additional State Pension you can build. However, you will be able to receive tax relief on the amount you put in.
Up to age 75, tax relief on contributions of up to 100 per cent of your earnings each year is offered.
It is recommended to get a personal pension for people who:
The Pensions Advisory Service (TPAS) are a great resource for questions about setting-up or running a pension fund. They also respond to citizens with a problem, complaint or dispute with their occupational or private pension arrangement.
There are different types of personal pension. They include:
A yearly forecast informs investors of the status of the fund. It also lets you know the expected pay-out if contributions remain the same. The final value will be determined by how much has been paid in and how well the fund has performed. Charges of running the fund will also be deducted.
Upon retiring, you can take up to 25 per cent of the value of your total personal pension savings as a tax-free lump sum. You then have two options:
The earliest age at which you can take your personal pension is 55. Some funds allow you to take your pension out before this point, but this is uncommon.
It is common to wait until age 60 or 65 and take this money out in tandem with the state fund, but you do not have to retire from work to get your pension benefits. You can wait to close the fund until 75 if you wish.
The system of collecting state pension is more complicated for British living abroad and for expats living and working in the UK. If you live outside the UK and you have paid enough UK National Insurance contributions to qualify, you can claim their State Pension.
You can get a State Pension forecast if you need to find out how much State Pension you may get.
Depending on how long you work abroad, you can have your contributions credited to your UK State Pension or you could receive two pensions - one from the UK and one from the country where you lived and worked. This will be decided when you reach State Pension age, taking into account where you live.
Due the United Kingdom decision to leave the UE, new rules on applying/claiming your state pension in the EU, EEA and Switzerland now apply.
However, you can still carry on receiving your UK State Pension if you move to live in the EU, EEA or Switzerland and you can still claim your UK State Pension from these countries.
You can also count relevant social security contributions made in EU countries to meet the qualifying conditions for a UK State Pension.
To apply after you reach you retirement age, you will need to tell the government office that deals with your benefits or your UK State Pension if you are moving or retiring abroad.
When and how you can claim your pension depends on your pension scheme's rules, but it is usually after you are 55 (average age between 60 and 65 years old).
However, a forecast of how much you will receive when you retire, estimates of any survivor's benefits that may become payable, and how much you will get if you have to retire early due to ill health should be readily available. In a change in legislation from 2006, you are able to draw on your pension and continue to work for the same employer.
You pay tax if your total annual income adds up to more than your Personal Allowance (standard Personal Allowance in 2021 is £12,570)
Your total income could include:
If you live abroad but are classed as a UK resident for tax purposes, you may have to pay UK tax on your pension. The amount you pay depends on your income.
However, if you are a non-resident your tax position depends on whether you live in a country with a double taxation agreement with the UK. This means you will not have to pay UK tax on your State Pension, but it will be taxable in the country where you live. If you live in a country without a double taxation agreement, you will have to pay UK tax and may be taxed again abroad.
Government Agencies to Inform of Your Move. If you are moving abroad to live, you will need to inform:
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