The state pension is a regular payment of money which is given to eligible recipients over the state pension age. The amount you get is based on the amount of national insurance paid throughout your life.
The state pension legislation changed significantly on April 6, 2016 for women born on or after April 6, 1953.
The pension age for women was once 60 years old but that has increased to 65 years.
There is a ‘single-tier’ pension payment for people born on or after April 6, 1953 with a ‘full level’.
In 2019/20, the full level of the new state pension is £168.60 a week, or £8,767.20.
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You may get more or less than this because of the changes to the state pension, that mean you can no longer build up an additional state pension – nor can you ‘contract out’ of it to get a higher private pension.
You only qualify for a full state pension once you have 35 years’ worth of national insurance contributions.
To qualify for any state pension at all, you need 10 years of National Insurance contributions.
If a person reached state pension age before April 6, 2016, the changes won’t affect them. In this case, the basic state pension is £129.20 a week, equivalent to £6,718.40 a year).
For married couples where both partners have built up a state pension, each will get double this amount – which is £258.40 a week.
However, if one partner hasn’t built up their own state pension, they’ll still be able to claim a state pension based on their other half’s record.
The best way to check your state pension is on the Government’s website.
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Is state pension taxable?
State pensions are treated as earned income for income tax purposes.
This means you are no longer liable to pay any further National Insurance contributions once you have reached state pension age, but you are subject to income tax.
The amount of income tax you pay depends on your gross income, the total amount of income potentially liable to tax which you receive from all sources, including other pensions and bank or building society interest.
You do not pay any income tax on your gross income up to your personal allowance, which for the tax year 2019 to 2020 is £12,500.
Your Personal Allowance may be larger if you claim Marriage Allowance or Blind Person’s Allowance.
Marriage Allowance lets you transfer £1,250 of your Personal Allowance to your husband, wife or civil partner and subsequently reduces their tax by up to £250 in the tax year.
Blind Person’s Allowance is an extra amount of tax-free allowance which means you can earn more before you start paying Income Tax.
Your personal allowance amount will be smaller if your income is more than £100,000.
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