The State Pension and you

Changes to the State Pension were introduced last April, but how do they impact on you as members of the Armed Forces? The Forces Pension Society has been trying to circulate information on the State Pension to as many of you as possible. So if you’re leaving Service soon, here’s what you need to know.

 

The background

Before 6 April 2016 the State Pension was made up of two parts – the Basic State Pension and the State Second Pension (S2P) designed to supplement the Basic State Pension.

Most people (unless very low paid) paid National Insurance Contributions (NICs) which counted towards their Basic State Pension.

Many employers’ pension schemes, including all in the Armed Forces Pension Schemes were ‘contracted out’ of S2P. This meant that you paid less NICs, but the downside was that you would receive a smaller overall state pension.

From 6 April 2016 contracting out stopped and everyone in the UK now pays the same NICs. You may have noticed on your pay statement that your NIC contributions have increased.

The new State Pension

You’ll be able to claim the new State Pension when you reach State Pension Age if you’re:

  • a man born on or after 6 April 1951 or
  • a woman born on or after 6 April 1953

You can check at what age you'll be eligible to receive your State Pension on Gov.uk

How much state pension will I get?

The full new State Pension is £159.55 a week. The actual amount you get depends on your National Insurance record.

You’ll usually need to have 10 qualifying years on your National Insurance record to get any new State Pension. A qualifying year is where you’re employed and earning over £157 a week and paying NICs.

As you were a member of a contracted-out pension scheme before April 2016 you won’t get the full amount of new State Pension unless you have 35 qualifying years with at least 7.5 years at the higher rate. See How it’s calculated on Gov.uk

How much have I paid so far?

Last summer the Department for Work and Pensions should have written to tell you the value of the pension you have paid for till 6 April 2016 (foundation amount).

If you paid the higher rate NICs before joining the Armed Forces, this will be taken into account. Your future NICs will be added to this foundation amount.

Money fitness tip

Plan ahead by checking your State Pension Age and how much State Pension you could get on Gov.uk

You can check how much State Pension you will get on Gov.uk.

What if I don’t have enough?

Most of you will be leaving the Armed Forces way before State Pension Age, so should have the chance to build up the full NIC entitlement in other employment.

Even if you haven’t made enough contributions to get the full amount, you will not get less than you have earned.

Your Armed Forces Pension will be paid separately – see Military pensions.

More information

The Forces Pension Society article in June 2017 Pathfinder magazine (page 6) 
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