Changes in the state retirement pension in the UK were introduced on 6 April 2016. Still, many Poles working there have no idea how important they are to them. This ignorance can lead to many unpleasant surprises. If you work or have worked in the UK, you should learn as soon as possible about the latest legal solutions recorded in the pages of British legislation.
With regard to the award of pensions the British system is much more stable and predictable than that in Poland, but despite this the UK authorities from time to time make changes in the rules for granting pensions. The old pension system applicable in the UK, was considered too complicated and deeply dividing the amount in pensions granted to women and men (more often women received lower pensions). The British government decided to act. In 2016, a new, much simpler and much fairer system of allocating benefits began. Changes in the state retirement pension in the UK were introduced on 6 April 2016 under the name State Pension.
Persons who are eligible to receive a new pension are:
- men born on 6 April 1951 or later
- women born on 6 April 1953 or later
Those eligible to receive retirement pensions prior to 6 April 2016 will receive a pension granted under the old rules.
The main differences between the new and the old pension systems:
The biggest change in the rules for granting pensions is the obligation to pay the NIC (National Insurance Contributions) or Credits (National Insurance Credits) to receive a full pension. To qualify for the new pension NICs must be paid for a minimum of 10 years. Importantly, these years need not necessarily succeed each other – all those who have contributed for a period of 10 to 34 years get an appropriate portion of pension contributions. As you will remember, in the case of the old age pension it was enough to pay contributions for 30 years. Where you paid them for less than 30 years, you were entitled to compensation for each year.
If you worked in Poland or in another country with which the United Kingdom has entered into agreement on social security, the years you worked in the UK will be added to your current work experience. This means that if you have worked 10 years in the UK and 5 years in Poland, you can apply for a pension payable for the 15 years worked.
One of the important reasons for which the changes in the state retirement pension in the UK were introduced was to increase public awareness on the issue of granting pensions and make them aware that they should not delay in saving. The new rules are mainly to focus on individual pensions, so there are no special distinctions for those remaining in partner, marriage or divorced relationships expected.
No matter how much an employee earns, the employer is required to run a company pension at his request. Currently, the minimum contribution is 2% of salary. Of this, the employee pays 0.8%, the employer 1%, and 0.2% is a tax credit (tax relief). For the years 2017 and 2018 it is planned to raise the percentage point
Types of pension benefits in the UK:
- defined contribution – based on the amount of contributions paid into your pension pot
- defined benefit – the employer shall pay the employee a pension amount dependent on his last salary and the period of time worked.
No matter how much an employee earns, the employer is required to run a company pension at his request. Currently, the minimum contribution is 2% of salary. Of this, the employee pays 0.8%, the employer 1%, and 0.2% is a tax credit (tax relief). For the years 2017 and 2018 it is planned to raise the percentage point.
How to check how many years I’ve worked?
To check how many years you have worked already, you need to contact the HMRC. If you decide on online contact, you need to prepare the required documentation, taking into account: your date of birth, date of marriage, date of change of address, the tax years you want to check, the previous address of your employer, and general information about your income. Filling out the form should not take you more than half an hour. After several months, the office will send you a letter informing you how many years you have worked.
If you haven’t paid social security contributions or have not received credits for social insurance, you may have gaps in the history of contributions. These could be due to the fact that you were unemployed, lived abroad, were employed but had a low income and didn’t pay your premiums, were self-employed and didn’t pay your premiums… These gaps mean that you cannot receive the full state pension. It should then be supplemented by voluntarily paying premiums (if you are entitled to this option).