Chapter VI: Old-age Chapter VI: Old-age
Applicable statutory basisSocial Security Contributions and Benefits Act 1992 and the regulations thereunder.
Pension Act 1995.
Basic principlesContributory State Retirement Pension scheme (for people who have reached state retirement age) made up of a flat rate Basic Pension, an earnings-related Additional Pension (SERPS) and an earnings-related Graduated Retirement Benefit. A non-contributory State pension is payable to certain persons aged 80 years and over (see Table XI.2). Voluntary supplementary pension schemes may be used to replace benefits provided by SERPS.
Field of applicationBasic pension:
All employed and self employed persons (except certain married women who chose before April 1977 not to be insured) who have paid sufficient contributions for a required numbers of years.
Graduated Retirement Benefit:
All employed persons who paid "graduated" (i.e. earnings-related) contributions between 6 April 1961 and 5 April 1975.
State Earnings Related Pension (SERPS):
based on an employed person's earnings from April 1978 on which full rate contributions are paid between the lower and upper earnings limits.
Exemptions from compulsory insuranceNo compulsory insurance for employed persons earning less than GBP 64 (EUR 90) per week or for self-employed persons with annual earnings less than GBP 3,590 (EUR 5,049)
ConditionsBasic pension:
Generally contributions paid for at least 10 years.
Graduated Retirement Benefit:
Must have paid sufficient "graduated" (earnings-related) contributions between April 1961 and April 1975 to earn at least 1 "unit" of graduated pension [1 unit earned for every GBP 7.50 (EUR 11) men or GBP 9 (EUR 13) (women) contributed].
SERPS:
Must have surplus earnings, i.e. in excess of the lower earnings limit in at least one year since April 1978.
Basic pension:
Contributions paid or credited for 90% of years in "working life" [i.e. from age 16 to age 65 (men)/ 60 (women)]. Generally this means that for full amount of pension, contributions must be paid or credited for 44 years (men) and 39 years (women).
Standard pension
Men: 65 years.
Women: 60 years (gradually rising to 65 over period 2010 and 2020).
Early pension
No early pension.
Deferred pension
Deferment possible. Maximum deferment period of 5 years (until 70 years of age for men and 65 years for women).
BenefitsBasic Pension:
length of time insured.
Additional Pension (SERPS):
level of earnings.
Graduated Retirement Benefit:
amount of contributions paid between 1961 and 1975.
Basic pension:
Flat-rate amount of GBP 64.70 (EUR 91) per week (paid pro-rata if number of qualifying years is less than the requisite number but at least a quarter of that figure).
Graduated Retirement Benefit:
GBP 0.084 (EUR 0.12) per week for each GBP 7.50 (EUR 11) (men) or GBP 9 (EUR 13) (women) contributed.
Minimum for a person on their own contributions: GBP 0.084 (EUR 0.12) per week. Maximum: GBP 7.22 (EUR 10) per week (men) and GBP 6.05 (EUR 8.51) per week (women).
SERPS pension:
Accrual rate of 1.25% a year, based on average indexed surplus earnings (after 1978) between the lower and upper earnings limit.
Additional Pension (SERPS):
Calculated based on average indexed surplus earnings (after 1978) between the lower and upper earnings limit.
Basic Pension:
Number of years required for full pension reduced by number of years (after 1978) spent at home caring for children or sick or disabled person (Home Responsibilities Protection HRP). However, number of years required for pension cannot be reduced below 20 through HRP. Apart from HRP, contributions are credited for periods of sickness, incapacity and unemployment and, in the case of men, from age 60 to 65.
Spouse
Basic pension:
GBP 38.70 (EUR 54) per week.
Graduated Retirement Benefit and SERPS:
No supplement.
Children
Basic pension:
Each child for whom Child Benefit is received: GBP 11.30 (EUR 16) a week. GBP 9.90 (EUR 14) for a child for whom the higher rate of Child Benefit is payable.
Graduated Retirement Benefit and SERPS pension:
No supplement.
Christmas Bonus: GBP 10 (EUR 14) (lump sum) paid once a year.
Age addition: Basic Pension increased by GBP 0.25 (EUR 0.35) a week from age 80.
Winter Fuel Payment: Lump sum paid once a year. GBP 50 (EUR 70) if pensioner also receiving means-tested Income Support; GBP 20 (EUR 28) to all other pensioners living on their own; GBP 10 (EUR 14) each for those living with other eligible pensioners.
Basic Pension:
Minimum of 25% of full rate of pension, GBP 16.20 (EUR 23), payable if contributions paid for at least 10 years. See Table XI for minimum non-contributory pension.
Basic Pension:
Full (100%) pension GBP 64.70 (EUR 91) payable if contributions paid for 44 years (men) or 39 years (women).
Additional Pension (SERPS):
GBP 120.11 (EUR 169) per week.
No early pension.
Pensions are increased by approximately 7.5% for each year of deferment.
AdjustmentAdjustment by legislation at least annually in line with movements in the general level of prices.
Partial pensionNo concept of partial pension.
Accumulation with earningsPension entitlement not affected by earnings if person continues, or starts, gainful employment or self-employment after pension age.
Taxation and social contributionsBasic Pension, Additional Pension (SERPS), and Graduated Retirement Benefit are taxable as income, but any increases in respect of dependent children are not.
Basic Pension, Additional Pension (SERPS), and Graduated Retirement Benefit:
In general there is a progressive taxation of gross income after deduction of personal and other reliefs.
Main personal reliefs per person per year:
Aged under 65:
GBP 4,195 (EUR 5,899).
Aged between 65 and 74:
GBP 5,410 (EUR 7,608).
Aged over 75:
GBP 5,600 (EUR 7,875).
Supplement for married couples and single parents:
Aged under 65:
GBP 1,900 (EUR 2,672).
Aged between 65 and 74:
GBP 3,305 (EUR 4,648).
Aged over 75:
GBP 3,345 (EUR 4,704).
None.