A history of state pensions
previously on DWP's web site, now [re]moved
copy taken February 2016
This is a summary of state pension on a DWP web page and backed up here in case it disappeared [it did].
The State Pension was first introduced on 1 January 1909. The foundation of a universal contribution-related basic State Pension was laid in the 1940s. There are two main types of State Pension: contributory and non-contributory. Contributory State Pension consists of any combination of a Basic Pension (BP), Additional Pension (AP) or Graduated Retirement Benefit (GRB). Non-contributory pension consists of a Basic Pension plus any Graduated Retirement Benefit that is due.
The two categories of contributory State pension are:
- Category A - based on a person's own National Insurance contributions, and
- Category B - dependant on the contributions paid by a spouse/civil partner.
The two main conditions for payment are that:
- the person has reached State Pension age (presently 65 for men, and between 60 and 65 for women, and
- the contribution conditions are satisfied.
People who meet the contribution conditions get a flat rate basic pension at the standard rate. If the conditions are only partly met, the basic pension is paid pro rata. From 6th April 1978 to 5th April 2010, a person's contribution record can be protected, if their opportunities to work are limited because of responsibilities at home, such as bringing up a family or looking after a sick or disabled person. This was known as Home Responsibilities Protection (HRP). Credits for parents and carers replaces HRP from 6th April 2010. Extra money for dependant children can be paid with Category A or B pensions. Extra money can also be added to a Category A pension for a dependant spouse/civil partner or someone who looks after the children.
The categories of non-contributory State pension are:
- Category C - payable to people over State pension age on 5 July 1948. The widow of a man who was over 65 in July 1948 can also get a category C pension.
- Category D - is awarded to people who:
- reach the age of 80
- satisfy certain residency conditions, and
- failed to qualify for a category A or B pension, or
- receive less than the non-contributory rate.
Prior to 6 April 2005, if a person did not take their State Pension until after State Pension age, or they stopped claiming their State Pension, they could earn increments. The amount of the increment was approximately 7.5% for every year of delay in claiming the state pension (equivalent to 1% for every 7 weeks).
From 6 April 2005, if a person delays claiming their State Pension, they can then choose one of the following options when they do decide to claim:
- Extra State Pension (increments). The amount that can be earned from delaying taking the State Pension will be approximately 10.4% for every year of delay in claiming (equivalent to 1% for every five weeks); or
- A one-off "lump sum" payment. Instead of receiving extra State Pension for life the person could claim a taxable, one-off, lump sum payment based on the amount of State Pension delayed claiming, plus interest. They also receive their normal State Pension.
The effect of Tax Credits: From April 2003 figures in this, and future DWP publications, are affected by the introduction of Child Tax Credits (CTC). The main changes are:
- Child dependency increases paid with non-income related benefits were abolished for new claims to State Pension, Bereavement Benefit, Incapacity Benefit and Carer's Allowance from April 2003.
- From April 2003 onwards, CTC replaced the child elements of Income Support (IS) and income-based Jobseeker's Allowance (JSA(IB)) for those with a Tax Credits award.
Equalisation of State Pension Age: The age at which women reach State Pension age is gradually increasing from 60 to 65 between April 2010 and April 2016 to November 2018. Under current legislation, State Pension age for men and women is planned to increase to: 66 between November 2018 and October 2020; 67 between 2034 and 2036; 68 between 2044 and 2046. This will introduce a small increase to the number of working age benefit recipients and a small reduction to the number of pension age recipients. Figures from May 2010 onwards reflect this change.