State Pension

[rov1200]

The value of the state pension is �90.70 for a single person and �145.05 for a married couple. If a married man and wife both working and each paying full stamps are they entitled to the full amount and will their combined pension be �90.70 x 2 or will it reduce to the �145.05.

Also in a second case if a man has paid full contributions and the wife only about half the contributions how is the joint pension calculated.

[Ethel]

If both husband and wife have each paid enough NI contributions to qualify for their full state pensions individually, they each get the full single pension.


If any one of them have not paid enough to qualify for a pension, or a very reduced pension, then they will get the married couple's pension.

So, if two x single pensions are greater than the married pension, they each get their own single pensions.

If two x singles is less than the married couple's pension, they get that instead.

[buildersmate]

As above, plus: -
The full Basic State pension is earned according to the number of qualifying years accrued by the individual. The rules about qualification are about to change for anyone reaching state pension age after 6th April 2010. From this date the number of qualifying years required will be reduced to 30 - either paid or credited NI contributions for each year. Each individual gets one-thirtieth of the Basic State pension for each year of NI contribution.

[rov1200]

Yes thanks but it seems there is an anomoly between the two cases above. The couple with full contributions will receive all their entitlement (ie 2 x single pension). The couple with just one contributor will get the married persons pension. But the loser it seems is the couple where one of them was getting a part pension but is wiped out when retirement starts for the main contributor.

In other words the couple with one contributor will get the same as 1-1/2 contributors ie the married persons pension.

[buildersmate]

True. But there are anomalies up the ying-yang with the scheme so your point palls into insignificance. I'm just explaining the 'rules' - it's up to you to work out how best to exploit them.
For example, for many years married women could opt out of paying NI for a pension (OK - it was changed a while back now) - but their husband still got a married person's pension.
No-one gets just �90 pw anyway because the means-tested lower limit is somewhere around �120. So those that do nothing (or cannot afford to) about extra retirement funds get 'free' extra funds anyway.
Those earning a lot and putting into their own pension still get assessed for NI on a percentage of their earnings - but it still only gets them a flat Basic State pension - yet they've paid a shed more in NI.
I could go on. The reality is that there are swings and roundabouts - just plan to make sure you maximise the speed of your own roundabout.

[rov1200]

The number of people I've known who have elected to bring their contributions up to date, some paying thousands when it is not necessary as the pension will not be any higher than if they had not contributed at all. Not much said about this in the financial press!

[buildersmate]

Mrs. Buildersmate was 'offered' the same generous opportunity by HMRC. We worked out that the required 30 years of qualifying years would easily be earned well before normal retirement age, without HMRC's generous offer to throw money into the nearest drain.
Everyone should do this calculation before deciding.