State pension: Expert discusses possible 'significant increase'
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State Pension payments are currently split into two tiers, and which one a person falls under is dependent on their age. The basic state pension is the ‘old’ scheme which is available to men born before April 6, 1951 and women born before April 6, 1953. People will be able to claim the new state pension, however, if they are a man born on or after April 6, 1951 or a women born on or after April 6, 1953.
If a person reached state pension age before April 6, 2016, they will get the state pension under the old rules.
The full amount differs between these schemes as the basic state pension stands at £137.60 per week, and the new state pension at £179.60 per week.
Of course, different people will receive varying amounts based on their individual circumstances, contributions and whether they were “contracted out”.
However, what some may be unaware of is the fact that they could be entitled to an additional state pension sum.
The Government describes the Additional State Pension as an extra sum a person could get on top of their basic state pension.
Therefore the individual must qualify for the state pension under the older rules of the scheme.
At present, there is no fixed amount for the Additional State Pension, but what a person receives is based on a number of factors.
- How many years National Insurance was paid for
- A person’s earnings
- Whether someone has “contracted out”
- Whether a person topped up their basic state pension (only possible between October 2015 and April 2017)
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The Additional State Pension is comprised of three main schemes in total.
A person may have contributed to more than one depending on how long they have worked, or whether they chose to top up their state pension.
From 1978 to 2002, the State Earnings-Related Pension Scheme (SERPS) ran, and many will have contributed if they were employed.
From 2002 to 2016, the scheme was the State Second Pension, and individuals contributed if they were employed or claiming certain benefits.
Finally, from October 2015 to April 2017 was the state pension top up.
This will have been contributed towards by those who reached state pension age before April 6, 2016 and who opted in.
The details can get complex, but thankfully, the Government offers full guidance through its official website.
Certain individuals may have contracted out, but only if their employer ran this type of scheme, so it is worth checking if one can.
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While a member of the contracted-out workplace pension, Britons will have not contributed towards the Additional State Pension.
But in some cases, they could be entitled to the Second State Pension, even if contributions were not made – for example, if someone had low earnings.
Britons will not have to do anything in order to claim the Additional State Pension, though.
If they are eligible, it will be automatically received, but a person should still check their entitlement.
After a claim is made, the Pension Service will write to the individual concerned to inform them about how much they are receiving.
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