The State Pension is a regular payment from the government most people can claim when they reach State Pension age.
How much is the UK State Pension?
The State Pension changed on 6 April 2016. If you reach State Pension age on or after that date you’ll get the new Single Tier State Pension, under the new rules.
Not everyone will get the full new State Pension amount, it will depend on your National Insurance record. The full amount of the new State Pension is set above the basic level of means-tested support (this is Pension Credit standard minimum guarantee). The full amount of the new State Pension is £168.60 a week (2019 to 2020 rate).
You might get more than the full amount if you have built up entitlement to the Additional State Pension under the old system. This is sometimes called the State Second Pension or ‘SERPs’.
You might get less than the full amount if you were ‘contracted out’ of the Additional State Pension.
Did you know that you can top up your UK State Pension whilst living abroad?
It is important to note that whilst living abroad, you do not have to pay National Insurance Contributions (NICs) – but you may need to in order to protect your UK State Pension, depending on how many payments you have already made.
Expats and former expats may make voluntary contributions to fill any gaps in their NI record. The decision whether to do this or not will depend largely on personal circumstances.
This is likely to depend on whether you plan to claim the UK State Pension in the future, whether you’re likely to be returning to the UK, as well as the State Pension entitlements you’ve already built up.
How much will you be entitled to?
In order to be entitled to the UK state pension you need a minimum of 10 qualifying years up to a maximum of 35 years for the full state pension.
If you have missed a number of years’ worth of contributions towards your National Insurance/State Pension you are entitled to pay back up to 6 missing years.
If you have not yet reached State Pension Age but are worried that your National Insurance record might not qualify you for the State Pension, you can make Class 3 National Insurance contributions.
These contributions allow people to fill gaps in their record to improve their basic State Pension entitlement.
How to find out how many qualifying years you have
You can find out just how many qualifiying years you by visiting the HMRC wesbite:
You’ll need your National Insurance number for this and will need to register for access to the online Gov.uk gateway (which is also useful for making online UK income tax returns).
Or you can request a pension statement by filling in form BR19, to see how many qualifying years you may have. A financial adviser can help you complete this.
A little tip - Be sure to check whether you paid enough National Insurance in the year you left the UK for it to be treated as a qualifying year on your pension record.
Should all expats top up their NI contributions?
Topping up NI contributions is not worth doing for everyone. In particular, younger people who have many years of their working lives to go, and married women, may see little or no benefit.
If the voluntary payment gives a state pension return that is greater than the expense or better than the yield from investing elsewhere, then the answer is probably yes.
If not, the expat would likely be better off keeping the money.
Other factors also apply, such as health. There’s no point in investing the money for a long-term return in the state pension, if you have a lifestyle or health condition that means you may pass away before collecting the benefit of the payment.
State Pension ages
The state pension age in 2018 was 65 for both men and women, increasing to 66 in October 2020 and to 67 in 2028. The government will then review the state pension age every five years. You can check your state pension age here: Check state pension age
Will your pension increase over time?
As a British expatriate and according to current legislation you are still able to benefit from inflationary increases in the UK state pension, providing you retire within a certain jurisdiction.
This is inline with the 'Triple Lock' system, so that your basic state pension will increase in retirement with the higher of national average earnings, CPI or 2.5%.
What if you don't retire to the UK?
If you live or are planning on retiring in the EEA, Gibraltar or Switzerland, you will usually get an increase in your pension every year.
Britain also has bilateral social security agreements with several countries. These are sometimes called Reciprocal Agreements or Double Contribution Conventions. Expats will know these countries as places where they are paid the full state pension instead of having the payment frozen at the rate of the first payment.
Besides the EEA countries, Gibraltar and Switzerland, these are:
Barbados, Bermuda, Bosnia-Herzegovnia, Croatia, Guernsey, Isle of Man, Israel, Jamaica, Japan, Jersey, Macedonia, Mauritius, Montenegro, Philippines, South Korea, Serbia, Turkey and the USA.
Note that although the UK does have social security agreements with Canada and New Zealand, but you cannot get a yearly increase in your UK State Pension if you live in either of those countries. You can find the full list here: Receive increases if you live here
If you’re unsure whether topping up your State Pension is worth doing you can speak to an financial adviser. Get in touch