Benefits for the Elderly - State Retirement Pension

The principal state benefit for retirement is the state retirement pension. This is a contributory benefit which is paid at a flat rate. In addition a person may be entitled to additional pension from either the graduated pension scheme or the state earnings related pension scheme (or both), and to income from a private pension; and may be entitled to one or more of the means tested benefits.

State retirement pension is payable once retirement age is reached - 60 for a woman, 65 for a man. It may be claimed up to four months before retirement age is reached. The claimant will have to prove their age. A claim may be made at any time up to three months after retirement age and arrears will be paid, but if a claim is made late, it will only be backdated by three months. Anyone who delays claiming is deemed to have deferred their retirement (see below). It is not necessary to have ceased work in order to claim, and income from earnings does not affect the claimant's benefit (which is not means-tested), although it may affect any addition payable for a spouse.

Most state pensions fall into either Category A or Category B. Category A pensions are those which are payable on the claimant's own contributions, and Category B pensions are those payable on the contributions of a spouse. In order to receive a Category A pension, the claimant must have a complete contribution record. This means firstly that he or she must have paid at least one full year's contributions, and secondly that he or she must have paid or been credited with contributions for the requisite number of years during his or her working life. The requisite number of years depends on the length of the working life, which is capable of running from 16 to 65; what the rule amounts to is that the claimant is entitled to one year off for every ten years of their working life.

Partial pensions

Someone with less than full contributions can receive a partial pension. This accounts for those married women who do not have a full set of contributions (because they have spent time bringing up children or caring for others, or because they have paid the married womanise' stamp, or both) but who nevertheless qualify for a lower amount of state pension based on the contributions that they have paid. As noted in the last article, a woman will not be able to claim a Category B pension on her husband's contributions until he reaches 65. As soon as she reaches 60, however, she can claim a Category A pension on her own contributions. If, when he reaches 65, her Category B pension entitlement is higher than her Category A pension entitlement, then she will receive that instead. (The rules apply equally in reverse, where it is the wife with the full contributions and the husband with a partial contribution record, but such cases are comparatively unusual.)

Widowed and Divorced People

It should be emphasised that Category B pensions are only payable on the contributions of a spouse and not of a cohabitee. What is the position of people who are widowed or divorced, and who have insufficient contributions for a full Category A pension in their own right? Those who are divorced can use their former spouse's contribution record in certain circumstances. To do so, they must have either divorced after pension age, or divorced before that age and not remarried. What the rule amounts to is that they can use their former spouse's contribution record, if it is better than their own, for the years they were married. This may mean that it is worthwhile postponing a divorce (provided neither spouse wishes to remarry) so as to continue to take advantage of the working spouse's contributions. Similarly, it may be worthwhile postponing a remarriage until after pension age - remarriage after that age does not affect pension entitlement.

A woman who is a widow on the day she reaches pension age, and who is receiving a widows pension, will automatically qualify for a Category B pension on her late husband's contributions. If she does not qualify by this route (perhaps because she was too young to receive a widows pension when her husband died) she can use the same rules as a divorced woman. A widower can also use the rules if he is widowed before pension age and does not remarry, or if he is widowed after his 65th birthday but before his wife's 60th birthday.

In neither case can those who reached pensionable age by 5th April 1979 take advantage of these rules. Anyone whose own contribution record is superior to that of his or her late or former spouse will receive a pension based on their own record irrespective of the above rules.

Category A pensions for the current (1997/8) benefit year are £62.45. Category B pensions are L62.45 for a widow or widower, and £37.35 for a married woman. All pensions are increased by 25p a week if the recipient is over 80.

There is one other category of pensions. Anyone who is not entitled to any other pension is entitled to a Category D pension at the age of 80, whether or not they have paid contributions. There is a residence condition; the claimant must have resided in the UK for ten of the last twenty years, and be ordinarily resident on his or her 80th birthday. The amount payable is £37.35 plus 25p for being over 80. This pension is also payable to anyone whose only entitlement to a pension is to a Category A pension of less than the rate of the Category D pension.

Deferring Retirement

It is possible to increase the value of the basic pension by deferring retirement for up to five years. For each week during which a Category A or Category B pension, or graduated retirement benefit, is deferred, the amount payable increases by one seventh of one per cent. This means that deferment for five years will increase the rate of pension by about 37%. However, given that there are no restrictions on continuing to work while claiming retirement pension, it may be more profitable to claim the pension when it is due and to invest it.

Retirement Pension and sickness

One group which may require advice at retirement age is those who are sick. Invalidity benefit (the forerunner of incapacity benefit) could continue to be claimed until five years after retirement age. This is not the case with long-term incapacity benefit. (Short-term incapacity benefit may be paid after pension age in certain circumstances.) However, those people who were receiving invalidity benefit before 12th April 1995 can continue to receive transitional incapacity benefit until five years after pension age, and so can those who are entitled to severe disablement allowance. There may be advantages in continuing to receive these benefits instead of taking retirement pension, in particular from the point of view of taxation, and the fact that both benefits may increase the amount of means tested benefits to which a person is entitled. This is a complex area and individual advice should be sought.

Additions to basic benefit

As mentioned above, there are two additional types of pension payable with the state pension - graduated retirement benefit and SERFS. Graduated retirement benefit is based on contributions made between 1961 and 1975. It may be paid even though there is no entitlement to any other state pension. Widows and widowers may draw on each others' entitlements.

SERFS, or the state earnings related pension scheme, pays an earnings-related pension in addition to the basic state pension to those whose employers have "contracted in" to the scheme. This excludes those who are members of an "appropriate" personal pension scheme, or whose employers have contracted out of SERFS in favour of their own scheme. The calculations of the amounts payable are complicated and have been made more so by changes to the scheme affecting different groups of people differently. The SERFS calculation is complicated, not least because of the change in the method of calculation for those reaching retirement age after 6 April 1999, who will generally gain less from the SERFS scheme than those reaching retirement age before that date. Details of the calculations can be found in specialist textbooks such as CPAG's Rights Guide to Non Means Tested Benefits, or Tolley's Social Security and State Benefits Handbook.

As with all matters to do with pensions, it is often worthwhile contacting the Contributions Agency at Longbenton, Newcastle upon Tyne NE98 1YX, to enquire as to the exact pension status of an individual.

Anyone in receipt of a retirement pension is also entitled to a Christmas Bonus of L10. In addition to any entitlement to state pensions, someone over pension age may be entitled to income support, housing benefit, and council tax benefit. Note that, for these means tested benefits, a person becomes a "pensioner" at the age of 60, whether they are male or female. There may also be an entitlement to disability benefits. These topics will be considered in the next two articles.

One other point which should be mentioned is the forthcoming change in retirement ages for women. The age will be raised from 60 to 65 between 2010 and 2020, and this will affect women born after 5th April 1950. Those born between that date and 5th April 1955 will reach retirement age at an age between 60 and 65, while those born after 5th April 1955 will reach retirement age at 65. The exact date for an individual depends on her date of birth.

The next article in the series will look at disability benefits for pensioners.

Alan Robinson, Legal & Welfare Rights Training, Orchard House, 11 Commonside, Crowle, DN17 4EX