McLean’s Financial Services

It is 100 years since the very first State Pension was introduced. Lloyd George introduced State Pensions in August 1908 when the Old Age Pensions Act was passed.

The first State Pensions guaranteed a minimum income to people over seventy. They received up to five shillings (25p) and were means tested.

Since then, the State Pension has changed a great deal but continues to provide financial security to the retired and elderly.

State Pension is paid to entitled people who claim it having reached State Pension age. It is based on National Insurance (NI) contributions and it is made up of different elements.

State Pension age
The State Pension age is currently 65 for men and 60 for women. The State Pension age for women will increase gradually from 2010, so that by 2020 it will be 65.

The increase in the State Pension age will not affect women born on or before 5 April 1950. Women born between 6 April 1950 and 5 April 1955 (inclusive) will have a State Pension age between 60 and 65. Women born on or after 6 April 1955 and before 6 April 1959 will have a State Pension age of 65.

The State Pension age for both men and women is to increase from 65 to 68 between 2024 and 2046, with each change phased in over two consecutive years in each decade. The first increase, from 65 to 66, will be phased in between April 2024 and April 2026; the second, from 66 to 67, will be phased in between April 2034 and April 2036; and the third, from 67 to 68, between April 2044 and April 2046.

What else should I know?
The Pensions Act 2007 and the Pensions Act (Northern Ireland) 2008 have made changes to the State Pensions system.

If you are a married woman and cannot get a full basic State Pension because you do not have enough qualifying years based on your own National Insurance (NI) contributions, you may be able to get a State Pension based on your husband’s NI contributions. You can only do this if he is already getting a basic State Pension and you are aged 60 or over.

If you are a widow, widower or surviving civil partner, you may be able to get a basic State Pension based on your late husband’s, wife’s or civil partner’s NI contributions.

If you are already a widow, widower or surviving civil partner you can get up to 100 per cent of your late husband’s, wife’s or civil partner’s additional State Pension.

If your husband or wife or civil partner reached State Pension age before 6 October 2002, you will receive up to 100 per cent of their SERPS pension or Additional State Pension when they die.

If your husband, wife or civil partner is due to reach State Pension age after 5 October 2002 but before 6 October 2010, if they die before you, you will receive a maximum of between
90 per cent and 60 per cent of their SERPS pension. The exact amount will depend on when, in this period, they reach State Pension age.

If you husband or wife is due to reach State Pension age on or after 6 October 2010, you will receive up to 50 per cent of their SERPS pension if they die before you.

The maximum amount of additional State Pension built up after 6 April 2002 under the State Second Pension that a surviving husband, wife or civil partner can inherit will be 50 per cent.

If you are divorced or your civil partnership has been dissolved and you cannot get a full basic State Pension based on the qualifying years from your own NI contributions, you may be able to get a basic State Pension based on your former husband’s, wife’s or civil partners NI contributions. They do not need to be getting their State Pension.

If you carry on working after claiming your State Pension, your earnings will not affect how much State Pension you get. But if you get an increase for a dependant, their earnings may affect how much increase you get for them.

If you put off claiming your State Pension for at least five weeks when you reach State Pension age, you can earn extra State Pension. The weekly amount of your State Pension will be higher, but you will not get any State Pension for the weeks you put off claiming.

From April 2005, if you put off claiming your extra State Pension for at least 12 months, you may be able to choose between extra weekly pension and a one-off taxable lump-sum payment when you do finally claim.

For more information or to discuss anything in this article feel free to contact Doug McLean via email or phone.