The new 'single tier' State Pension - Commons Library Standard Note

Published 16 January 2015 | Standard notes SN06525

Authors: Djuna Thurley

Topic: Pensions

There are two parts to the current UK State Pension: the basic State Pension, which is flat-rate, and the additional State Pension, which is partly earnings-related. The additional State Pension was provided through the State Earnings-Related Pension Scheme (SERPS) between 1978 and 2002 and, from 2002 through the State Second Pension (S2P).

The Government legislated in the Pensions Act 2014 to introduce a new single tier State Pension for future pensioners from 6 April 2016. People who have already reached State Pension age at that date will continue to be entitled to the State Pension under current rules.

The new State Pension, previously referred to as the “single-tier State Pension, is to be set about the basic level of means-tested support (i.e. at least £151.25 pw in 2015/16), with the actual amount set in autumn 2015. It will be uprated by at least the growth in earnings. Thirty-five ‘qualifying years’ (of National Insurance contributions or credits) will be needed for the full amount. Those with fewer than 35 qualifying years will receive a pro-rated amount, subject to them having at least ten qualifying years. In general, individuals will qualify for the single-tier on the basis of their own contribution record, so the special rules for marriage divorce or bereavement will end, with some transitional protection.

In October 2014, the Government launched a service giving people a personalised written estimate of what they can expect to receive under the new system. Initially focused on people reaching State Pension age in the first 5 years of the scheme, it would be expanded over the following 18 months. Information about the new State Pension is on Gov.UK.

The first set of regulations to implement details of the new State Pension – the (draft) State Pension Regulations 2015 - are due to be debated on 20 January 2015. Key measures include: the minimum qualifying period - ten years (see section 6.2 below); and the amount of extra state pension built up during a period of deferral (see section 6.4).

This note looks at the development of the proposals for a single-tier State Pension. The background is discussed in more detail in SN 5787 State Pension reform - 2012 (January 2013). The issue of women born between April 1951 and April 1953 who will not be eligible although a man born on the same date would be, is in Library Note SN 6620 (March 2014).

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