UK State Pension Update 2018: How Changes in State Pension Could Mean You’re entitled to an Increase in Your Pension
Due to a rise in inflation the UK government has been forced to raise the state pension for millions of people by around £250 a year.
Who Qualifies for the New State Pension?
The changes will take affect from April 2018 which will see the state pension increase for those who have reached state pension age after April 6th 2016.
For those who reached state pension age before April 6th 2018, they are only entitled to the basic state pension.
The new rules affect men born on or after April 6th 1951 and for women born on or after April 6th 1953.
In order to receive the full state pension, you must have 35 “qualifying” years of National Insurance contributions. The amount is reduced by 1/35th by each year that is not paid. If you have paid less than 10 years National insurance contributions you are entitled to nothing.
How Much More are you Entitled To?
The state pension has risen by 3% – therefore eligible pensioners will see their weekly payments increase by around £5 per week.
The most you are currently entitled to from the basic state pension is £122.30 per week.
However, after April 6th this year, the increase will see the state pension rise to £125.97 per week.
Pensioners who are eligible for the full new state pension will see their payments increase from £159.55 to £164.35 per week.
Why Will the State Pension Increase?
The basic state pension increases every year by whichever is the highest of the following: UK earnings growth; the percentage growth in prices in the UK (measured by the Consumer Prices Index); or 2.5%. This is known as the “triple lock”.
Increases of the state pension are protected by the triple lock, which means payments for pensioners are guaranteed to rise by the higher of the three.
The inflation rates in September are used as a benchmark by the department for Work and Pensions to set how much pensioners receive from the start of the tax year (6th April every year). Last September saw an increase in inflation rates due partly to the vote to leave the EU last summer.
As inflation this year is higher than both earnings and 2.5%, the lock has been set at 3%
Therefore, pensioners are entitled to an extra £4.78 a week to the full state pension of £159.55
Over the course of the year pensioners will receive an increase of £248.56 with a total sum of £8,545.50
It should be noted however that the state pension will only increase if you live in a European Economic Area, Gibraltar, Switzerland or a country with a reciprocal social security agreement with the UK.
The state pension will not increase if you reside in Canada, Australia or New Zealand.
Please get in touch with one of advisors today if you have any queries.