Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

R04 - 2023/24 > State Schemes > Flashcards

State Schemes Flashcards

1
Q

Q: How is the State Pension determined for individuals who reached their State Pension Age (SPA) before 6 April 2016?

A

A: Individuals who reached their SPA before 6 April 2016 receive a State Pension based on the pre-6 April 2016 rules, comprising of a Basic State Pension (BSP) and possibly an Additional State Pension.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Q: Between 6 April 2010 and 6 April 2016, what were the qualifications for receiving the full Basic State Pension (BSP) or a Category A pension?

A

A: Individuals qualified for the full BSP or a Category A pension if they had at least 30 ‘qualifying years’.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Q: Who can claim a ‘Category B’ pension and under what conditions?

A

A: A dependant, which may be a husband, wife, or civil partner, who reached SPA with less than 18 qualifying years, being entitled to less than 60% of the full BSP in their own right, may have been able to claim a ‘Category B’ pension.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Q: What does eligibility to the Category B State Pension depend on?

A

A: Eligibility to the Category B State Pension is dependent upon the qualifying years achieved by the individual’s spouse or civil partner.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Q: What components could the Additional State Pension include for individuals who reached their SPA before 6 April 2016?

A

A: It could include the Graduated Retirement Benefit (GRB) accrued between 6 April 1961 and 5 April 1975, the State Earnings Related Pension Scheme (SERPS) accrued between 6 April 1978 and 5 April 2002, and the State Second Pension (S2P) accrued between 6 April 2002 and 5 April 2016.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Q: How is the State Pension determined for anyone who reaches their SPA on or after 6 April 2016?

A

A: Individuals who reach their SPA on or after 6 April 2016 receive the new State Pension.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Q: How many qualifying years do individuals need to receive any State Pension, and how many to receive a full new State Pension, after 6 April 2016?

A

A: Individuals need a minimum of ten qualifying years to receive any State Pension and at least 35 qualifying years to obtain a full new State Pension.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Q: How is the starting amount for the State Pension calculated for individuals who had not reached their SPA on 6 April 2016?

A

A: It is calculated as at 5 April 2016 and is the higher of either their entitlement under the pre-6 April 2016 State Pension rules or their entitlement under the new State Pension, as if the new State Pension had been in place at the start of their working life.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Q: What is a protected payment in the context of the State Pension?

A

A: When an individual’s starting amount is higher than the full amount of the new State Pension in 2016/17, the difference between their starting amount and the new State Pension is called their protected payment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Q: Why does the Government issue new State Pension forecasts, and who can benefit from them?

A

A: The Government issues new State Pension forecasts to help individuals understand whether paying Class 3 NICs would benefit them and for those who have been contracted out to understand how much ‘adjustment’ has been made in respect of this.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Q: How is entitlement to the new State Pension accumulated for employees and the self-employed?

A

A: Entitlement to the new State Pension is accumulated through Class 1 NICs for employees and Class 2 NICs for the self-employed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Q: Under what conditions can an individual receive credits towards their Class 1 or Class 3 NIC record?

A

A: An individual may receive credits towards their Class 1 or Class 3 NIC record if they satisfy certain conditions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Q: What are Class 3 NICs and who can benefit from them?

A

A: Class 3 NICs are voluntary and can be paid by those with an inadequate NIC record, allowing the individual to increase their entitlement to the new State Pension or to the Basic State Pension for those who reached their SPA prior to 6 April 2016.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Q: By what measure are the new State Pension and the Basic State Pension increased each year?

A

A: They are increased by the higher of earnings, measured by NAE, prices, and 2.5%, referred to as the ‘triple lock’.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Q: How are increases in other State Pension benefits (not including the New State Pension) and the revaluation of protected payments determined?

A

A: Increases in other State Pension benefits like GRB, SERPs, S2P and the additional pension purchased through Class 3A NICs, as well as the revaluation of protected payments, are based on the change in the Consumer Price Index (CPI). They do not benefit from the triple lock.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Q: Can State Pension be deferred under both the pre-6 April 2016 and post-6 April 2016 rules?

A

A: Yes, State Pension can be deferred under both the pre-6 April 2016 and post-6 April 2016 rules.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Q: What options are available for those who reached SPA before 6 April 2016 when deferring State Pension, and what about those reaching SPA on or after 6 April 2016?

A

A: Those who reached SPA before 6 April 2016 can defer for an increased income or a lump sum, whereas those who reach SPA on or after 6 April 2016 cannot defer for a lump sum.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Q: How is tax applied to the State Pension?

A

A: Tax is never deducted directly from the State Pension, but it is a taxable benefit and is treated for tax purposes as pension income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Q: Can the UK State Pension be paid to individuals living abroad and do they receive the annual increases?

A

A: Yes, the UK State Pension can be paid to someone living abroad, but whether they receive the annual increases depends on their country of residence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Q: What is the current State Pension Age (SPA) for men and women, and when is the next scheduled increase?

A

A: Currently, the SPA for men and women is 66, and it will increase to 67 between 2026 and 2028.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Q: What benefits may be available to a survivor whose spouse or civil partner dies on or after 6 April 2017?

A

A: The survivor may be eligible for either the standard or higher rate of Bereavement Support Payment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Q: Who is eligible for the higher rate of Bereavement Support Payment, and who receives the standard rate?

A

A: The higher rate of Bereavement Support Payment is payable to claimants who are pregnant at the time of their spouse/civil partner’s death or who are entitled to receive child benefit. The standard rate is paid to all other claimants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Q: Is it possible for a surviving spouse or civil partner to inherit any entitlements to SERPS or S2P after the death of their partner, and if so, how much?

A

A: Yes, a surviving spouse or civil partner can inherit some or all of any entitlement to SERPS or S2P that the deceased had.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Q: What is the purpose of the State Pension Credit?

A

A: The State Pension Credit is a means-tested benefit designed to provide a minimum level of income in retirement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q: What are the two aspects of the State Pension Credit?
A: The State Pension Credit has two aspects: the Guarantee Credit and the Savings Credit.
26
Q: Is Savings Credit available to those who reach their State Pension Age (SPA) on or after 6 April 2016?
A: No, Savings Credit is no longer available for those who reach SPA on or after 6 April 2016.
27
Q: What was the required percentage of 'working life' qualifying years needed to qualify for the full BSP for those who reached SPA before 6 April 2010?
A: 90% of their ‘working life’.
28
Q: How many working life years was considered for a male who reached SPA before 6 April 2010?
A: 49 years.
29
Q: How many working life years was considered for a female who reached SPA before 6 April 2010?
A: 44 years.
30
Q: What was the minimum qualification period, as a percentage, of the maximum amount to receive any BSP?
A: 25% of the maximum amount.
31
Q: How many qualifying years did a male need to have to receive any BSP?
A: Eleven qualifying years.
32
Q: How many qualifying years did a female need to have to receive any BSP?
A: Ten qualifying years.
33
Q: For couples (either married or in a civil partnership) where both reached SPA before 6 April 2016 and have at least 30 qualifying years, how much BSP do they each receive per week for the year 2023/24?
A: £156.20 per week.
34
Q: Which individuals who reached SPA before 6 April 2016 may have qualified for a Category A pension?
A: 1. A divorcee who can use the qualifying years of their former spouse. 2. A widow who is not entitled to a Widow’s Pension or bereavement benefits. 3. A widow or widower entitled to long-term incapacity benefit.
35
Q: Who qualifies as a dependant for the Category B pension?
A: A husband, wife, or civil partner.
36
Q: How many qualifying years must a dependant have reached SPA with to be considered for a 'Category B' pension?
A: Less than 18 qualifying years (i.e., they were entitled to less than 60% of the full BSP in their own right).
37
Q: What is the full rate of Category B pension for 2023/24?
A: £93.60 per week.
38
Q: Under what circumstances is the full rate of Category B pension paid?
A: It's only paid where the spouse or civil partner, whose NIC record was being used, was entitled to a full Category A pension when they reached their SPA (which had to be before 6 April 2016).
39
Q: How is the Category B pension adjusted if the spouse or civil partner was not entitled to the full Category A pension?
A: The Category B pension would be reduced proportionately. For instance, if they were only entitled to 90% of the full Category A pension, then the maximum Category B pension payable would be 90% of the maximum.
40
Q: If someone was entitled to 90% of the full Category A pension, how much Category B pension would they get in 2023/24?
A: 90% × £93.60.
41
Q: Can someone who reached SPA before 6 April 2016 receive both a Category A and Category B pension?
A: Yes, it is possible for someone to receive both a Category A pension and a Category B pension.
42
Q: Which individuals might be entitled to receive the Additional State Pension?
A: Individuals who reached their SPA before 6 April 2016.
43
Q: What are the three components of the Additional State Pension?
A: 1. Graduated Retirement Benefit (GRB) - accrued between 6 April 1961 and 5 April 1975. 2. State Earnings Related Pension Scheme (SERPS) - accrued between 6 April 1978 and 5 April 2002. 3. State Second Pension (S2P) - accrued between 6 April 2002 and 5 April 2016.
44
Q: On what basis was eligibility for GRB and SERPS determined?
A: Based on the Class 1 NICs paid by employees.
45
Q: On what basis was eligibility for S2P determined?
A: Based on Class 1 NICs paid by employees and credits for Class 1 NICs received by those claiming certain benefits.
46
Q: Were any of the Additional State Pension schemes available to the self-employed?
A: No, none of these schemes was available to the self-employed.
47
Q: How does the Additional State Pension change each year?
A: It increases based on increases in CPI (Consumer Price Index).
48
Q: Is the Additional State Pension subject to the triple lock guarantee?
A: No, it is not subject to the triple lock guarantee.
49
Q: What does it mean to 'contract out' of the additional State Pension schemes?
A: To ‘contract out’ means that an individual opts out of the Additional State Pension schemes, often through an employer’s contracted-out defined benefit scheme. During this time, they don't accrue entitlements to the Additional State Pension.
50
Q: What benefit did individuals receive while contracted out?
A: They paid lower rates of Class 1 NICs on part of their income.
51
Q: What did individuals receive when they contracted-out via a defined contribution scheme between 1988 and 2012?
A: They received a ‘rebate’ of part of their NICs from the Government, which was then paid into a private defined contribution pension plan in their name.
52
Q: As of 6 April 2016, what is the minimum number of qualifying years needed to receive any State Pension?
A: Ten qualifying years (through contributions or credits).
53
Q: What is the full rate of the new State Pension for 2023/24?
A: £203.85 per week.
54
Q: How does the new State Pension increase each year?
A: In line with the triple lock.
55
Q: How many qualifying years are needed for the full new State Pension?
A: At least 35 qualifying years (through contributions or credits).
56
Q: Can a higher pension be payable under the new State Pension rules?
A: Yes, if the individual has any entitlement to Additional State Pension (i.e. GRB, SERPS or S2P) accrued prior to 6 April 2016.
57
Q: Which NIC classes all accrue the new State Pension at the same rate?
A: Class 1, 2, and 3 NICs.
58
Q: How does the full rate of the new State Pension for 2023/24 compare to the BSP and the Guarantee Credit element of the Pension Credit?
A: The new State Pension is £203.85 per week, compared to the BSP of £156.20 per week and the Guarantee Credit element of the Pension Credit of £201.05 per week.
59
Q: What conditions allow an individual working in the EU to continue paying NICs in the UK?
A: The individual must have a certificate from HMRC and meet one or more of the following conditions: 1. Working in the EU temporarily for up to two years. 2. A multi-state worker working in the UK and one or more EU country. 3. A civil servant working for the UK Government. 4. Working onboard a vessel at sea with a UK flag. 5. Working as flight or cabin crew where the airline’s home base is in the UK.
60
Q: If an individual's starting amount was less than the full amount of the new State Pension in 2016/17, what can they do?
A: They can increase their State Pension by adding more qualifying years to their NIC record between 6 April 2016 and their SPA.
61
Q: What is a "protected payment" in the context of the new State Pension?
A: If an individual's starting amount was higher than the full amount of the new State Pension in 2016/17, the difference between their starting amount and the new State Pension is called their protected payment.
62
Q: How does the protected payment increase each year?
A: It increases in line with increases in the CPI.
63
Q: Do any qualifying years added after 5 April 2016 increase an individual’s State Pension entitlement if they have a protected payment?
A: No, any qualifying years added after 5 April 2016 will not increase the individual’s State Pension entitlement.
64
Q: What is the purpose of Class 3 NICs?
A: Class 3 NICs are voluntary and can be paid by individuals with an inadequate NIC record to increase their entitlement to the new State Pension or BSP (if they reached SPA before 6 April 2016).
65
Q: What is the general deadline for paying Class 3 NICs in relation to the tax year of the contribution shortfall?
A: They should be paid within six years of the tax year in which the contribution shortfall occurred.
66
Q: If someone wants to cover gaps for the tax year 2017/18 with Class 3 NICs, by when should they make the payment?
A: They must make the payment no later than 5 April 2024.
67
Q: Can Class 3 NICs be paid after reaching the State Pension Age (SPA)?
A: Yes, but only for a contribution shortfall that occurred prior to reaching their SPA.
68
Q: What is the weekly rate for Class 3 NICs for the year 2023/24?
A: £17.45.
69
Q: How is the rate determined for Class 3 NICs payments covering a gap in contributions from more than two years ago?
A: The rate will be the one applicable in the tax year of payment.
70
Q: What are the extended time limits for paying Class 3 NICs for the years 2006/07 to 2015/16?
A: Those affected by the change to the new State Pension had more time to pay Class 3 NICs. The extended time limits applied if the individual reached SPA on or after 6 April 2016 and they make the payment by 5 April 2025.
71
Q: How does the income purchased by making Class 3A NICs adjust over time?
A: The income purchased by making Class 3A NICs increases in line with the CPI, unless the person receiving the income lives in a country where the UK State Pension is not uprated.
72
Q: What provision is made for a surviving spouse or civil partner in relation to Class 3A NICs?
A: It provides a 50% surviving spouse/civil partner’s pension upon the death of the individual who purchased the income.
73
Q: How is the income from Class 3A NICs taxed?
A: The income purchased by the Class 3A NICs is taxed as pension income in the same way as any other State Pension income.
74
Q: Can the income from Class 3A NICs impact means-tested benefits?
A: Yes, it will be taken into account if means-tested benefits are applied for.
75
Q: Can the income from Class 3A NICs be included in a pension sharing order?
A: Yes, it can be included in a pension sharing order in the event of a divorce.
76
Q: What is the main difference between Class 3 NICs and Class 3A NICs?
A: Class 3 NICs increase the number of qualifying years, allowing an individual to achieve a higher level of new State Pension (or BSP for those who reached SPA before 6 April 2016). Class 3A NICs allowed an individual to purchase a higher level of Additional State Pension, specifically related to benefits built up due to SERPS or S2P.
77
Q: What decision was made regarding the triple lock in the March 2021 Budget?
A: In the March 2021 Budget, the triple lock was retained, even though there was a strain on the Government’s finances due to COVID-19.
78
Q: Why was the triple lock broken for increases applied to the State Pension in 2022/23?
A: The triple lock was broken because earnings showed a large rise of 7% due to a ‘statistical anomaly’ caused by the ending of furlough, which had resulted in a 20% wage reduction the previous year. The Government believed it would be 'unfair' for pensioners to benefit from this fact.
79
Q: Despite the rise in inflation, how was the State Pension adjusted for 2023/24?
A: The triple lock was applied to the payments for 2023/24, resulting in an increase in payments of 10.1%.
80
Q: Is there a guarantee that the triple lock will be applied in the future?
A: No, there is no guarantee that the triple lock will apply over the longer term.
81
Q: Can the State Pension be deferred under both pre and post 6 April rules?
A: Yes, the State Pension can be deferred under both the pre and post 6 April rules.
82
Q: When can an individual choose to defer their State Pension?
A: The deferral can occur at the point the pension becomes payable (i.e. when the recipient reaches their SPA) or even after the pension has started to be received.
83
Q: How many times can a person defer their State Pension?
A: Deferral can only occur once.
84
Q: When an individual living outside the UK decides to end deferment and claim their State Pension, what determines the amount they receive?
A: The amount they receive is determined by the country they live in.
85
Q: Which individuals living abroad are subject to the same State Pension deferral rules as the UK?
A: Individuals who live in the EEA, Switzerland, or a country that has a social security agreement with the UK (except New Zealand and Canada).
86
Q: For individuals residing outside the EEA, Switzerland, and certain agreement countries, how is the extra State Pension determined upon ending deferment?
A: They will receive an extra State Pension equal to the larger of: 1. their State Pension entitlement when they reached SPA; or 2. their State Pension entitlement at the date they moved abroad.
87
Q: What is the minimum duration for which an individual must defer their State Pension to receive a higher weekly pension if they reached their SPA before 6 April 2016?
A: An individual must defer their State Pension for at least five weeks.
88
Q: How much will the State Pension increase by for every five weeks of deferral for those who reached their SPA before 6 April 2016?
A: The State Pension will increase by 1% for every five weeks they delay drawing it.
89
Q: What are the yearly and weekly increment percentages for deferring the State Pension under the pre-6 April 2016 rules?
A: The State Pension increases by 0.2% per week and 10.4% per year.
90
Q: If an individual defers their State Pension for at least twelve months, what options do they have?
A: They may choose to receive either a higher weekly State pension or a lump-sum payment.
91
Q: How is the lump-sum option calculated if chosen after at least twelve months of deferral?
A: The lump-sum payment is based on the amount of State Pension payments that were deferred, with weekly compound interest added at 2% above the Bank of England base rate.
92
Q: If someone began receiving their State Pension before 6 April 2016 and then chooses to defer it, which rules apply to them?
A: They will be subject to the pre-6 April 2016 rules, regardless of when the deferral takes place.
93
Q: What happens to the deferred State Pension benefits if an individual who reached their SPA prior to 6 April 2016 dies during deferral?
A: Their spouse or civil partner can inherit their deferred benefits, but they must meet certain conditions set by the DWP.
94
Q: For individuals who reach their SPA on or after 6 April 2016, what is the minimum duration they must defer their State Pension to receive any increase?
A: They must defer their State Pension for at least nine weeks.
95
Q: How much will the State Pension increase by for every nine weeks of deferral for those who reached their SPA on or after 6 April 2016?
A: The State Pension will increase by 1% for every nine weeks of deferral.
96
Q: What is the yearly increment percentage for deferring the State Pension under the post-6 April 2016 rules?
A: The State Pension increases by just under 5.8% for every full year of deferral.
97
Q: Do individuals who reach their SPA on or after 6 April 2016 have the option to take the deferred amount as a lump sum?
A: No, there is no option to take the deferred amount as a lump sum.
98
Q: Can a surviving spouse/civil partner inherit the deferred State Pension of an individual who reached their SPA on or after 6 April 2016?
A: No, it is not possible for a surviving spouse/civil partner to inherit deferred State Pension. However, the deceased’s estate may claim up to three months’ arrears of their State Pension.
99
Q: Is tax directly deducted from the State Pension?
A: No, tax is never deducted directly from the State Pension.
100
Q: How is the State Pension treated for tax purposes?
A: The State Pension is treated as pension income for tax purposes, taxed in the same way as earned income.
101
Q: List the three ways tax owed on the State Pension can be collected when the total income is above the individual's personal allowance.
A: 1. Collected from another pension using PAYE through an adjusted tax code. 2. Collected through an employer's PAYE scheme if the individual is still working. 3. Collected via their self-assessment tax return if they have no other pension income and are not working.
102
Q: How is a Category B pension treated for tax purposes for a spouse/civil partner who reached SPA before 6 April 2016?
A: A Category B pension is treated as part of their income for tax assessment purposes.
103
Q: For individuals who reached their SPA before 6 April 2016 and defer their State Pension for at least twelve months, how is the lump sum option taxed?
A: The lump sum is taxable at the same rate as the individual's other income but cannot move them into a higher tax bracket. If their taxable earnings are below their personal allowance in the year of the payment, the lump sum is tax-free, even if its value exceeds their personal allowance.
104
Q: In which situations is someone entitled to the annual increase to their State Pension while living abroad?
A: They receive the annual increase if they live in: 1. the UK for six months or more each year; 2. an EEA country; 3. Gibraltar; 4. Switzerland; or 5. a country with a reciprocal social security agreement with the UK.
105
Q: What happens to the annual increase if an individual returns to live in the UK after living abroad?
A: If they return to live in the UK, their State Pension will be increased each year.
106
Q: How is the State Pension income taxed for UK residents living abroad?
A: 1. UK residents are taxed in the usual manner. 2. Non-residents living in a country with a double taxation agreement with the UK don't pay UK tax on their State Pension but might pay tax in their resident country. 3. Those living in countries without a double taxation agreement with the UK pay UK tax and may also be taxed in their resident country.
107
Q: When can an individual start receiving their State Pension?
A: Upon reaching the State Pension age (SPA).
108
Q: What is the significance of November 2018 in relation to SPA?
A: In November 2018, the SPA for both men and women was equalized at age 65.
109
Q: When did the SPA increase to age 66?
A: The SPA increased to age 66 by September 2020.
110
Q: When is the SPA expected to increase to 67?
A: The SPA will increase to 67 between 2026 and 2028.
111
Q: What was introduced by the Pensions Act 2014 regarding SPA?
A: The Pensions Act 2014 introduced a requirement for a review of the SPA to be undertaken in every Parliament, considering factors like life expectancy, healthy life expectancy, and differences in life expectancy between socio-economic groups.
112
Q: What notice period is intended to be given to individuals for changes to their SPA?
A: At least ten years' notice.
113
Q: What were the findings from the Government's second review of the SPA in March 2023?
A: It concluded that the rise to age 67 should proceed, but a decision regarding the increase to age 68 was not reached. This will be revisited in the next review.
114
Q: What is the purpose of calculating income when an applicant applies for State Pension Credit?
A: The purpose is to establish Pension Credit entitlement.
115
Q: List some sources of income that are included in the calculation for Pension Credit.
A: State Pensions, private pensions, earnings, most social security benefits (e.g., Carer’s Allowance), and savings over £10,000.
116
Q: How are savings over £10,000 treated in the calculation for Pension Credit?
A: Savings over £10,000 are deemed to provide income of £1 for every £500 or part £500 in excess of £10,000.
117
Q: How is deemed income from savings calculated if someone holds £16,650 in an ISA for Pension Credit purposes?
A: The calculation is: (£16,650 - £10,000) / £500 = £13.3. Rounded up, this gives a deemed income of £14.
118
Q: Does deferring receipt of pension income increase entitlement to Pension Credit?
A: No, deferring receipt of pension income (either State or private) will not increase entitlement to Pension Credit because any deferred entitlement is included in the calculation.

R04 - 2023/24 (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions