UK Pension Reform White Paper :: Brit Expats


UK Pension Reform White Paper :: Brit Expats


UK Pension Reform White Paper. For British ex-pats Living in Crete and yet to retire, the significant related news on 14 January 2013 was the publishing by the London government of the White Paper setting out listing the reforms for the future UK state pension. In simple terms what the new pension will provide is the weekly payment of around £144, plus any inflation rises between now and that start date. Currently, the full state pension amount is £107.45 and this can be increased to £142.70, if someone is able to claim Pension Credit.
The first question that comes to mind: In reality what will the new single tier pension mean?
Answer: The reform takes effect from 2017 at the earliest. That is when the basic and additional pensions are merged for people reaching pensionable age at that time or after. It does not apply to those already retired who will remain on their current arrangements with the Pensions Service/HM Customs and Excise.
Next Question: Who truly benefits?
Answer: The single-tier State Pension will benefit people with low lifetime earnings and those who have time out of the labour market due to unemployment, caring, or disability. The single tier of around £144 would therefore be higher than they could expect under the current system. The self-employed, who currently only build up entitlement to the basic pension, could also receive a higher State Pension. The intention of changes is for them to be cost-neutral, so while some people gain others will receive less than they would have done had the current system continued – although there is protection for entitlements already built up. Broadly speaking, the London Government expect the groups who will receive less under the new system to include:
  • higher earners
  • people with less than the minimum number of contributions needed to qualify for any State Pension
  • and some people who may be affected by the abolition of the savings credit as part of Pension Credit

Question: What else should we know?

Following the Pensions Act 2011, women’s State Pension age will reach 65 by November 2018 and then State Pension age for both men and women will increase to 66 by October 2020.
One guarantee being offered if the White Paper is adopted into legislation is that the new Pension's administration framework will give a minimum of 10 years' notice of any rise in State Pension age for individuals affected. 
Compared to currently I can see one advantage for British expats living out mainland UK under the new scheme,  at least they get the whole pension as stipulated whereas now we just get the basic pension if we have declared we live in Crete or wherever but cannot claim Pension Credit. I guess all things will even out in 2017 when I quite expect that we will have inflation in the system that will eat away at the pension regardless of it being index linked.  Pension payments always unfairly trail the real cost of inflation on our wallets.
BritsinCrete Source: UK Pension Reform White Paper - Partly taken  from the AgeUK summary (previously known as Age Concern)
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