UK STATE BASIC PENSION

A person may be able to improve their UK basic pension by making voluntary contributions (class 3 contributions). Normally it is possible to back pay up to 6 missing qualifying years and also for the remaining years to retirement.

A UK Basic State Pension is paid when you reach state pension age, meet the contribution conditions and make a claim. It does exclude, for example, Australian nationals who have worked in the UK and now live again in Australia.

State Pension Age is:

• For men - age 65
• Women born on or before 05/04/1950 - age 60
• Women born on or after 06/04/1955 - age 65
• Women born on or after 06/04/1950 but on or before 05/04/1955 - an age between 60 and 65.

The contribution conditions are:

1. one qualifying years since 06/04/1975 from payment of class 1,2 or 3 national insurance contributions or 50 flat rate contributions at any time before 06/04/1975; and
2. meet a certain number of qualifying years to get the minimum 25% pension and about 90% of years of working life to get the maximum.

Some periods of residency in Australia before 28/2/2001 may count. Home responsibility protection has been available for complete tax years since April 1978 to cover care providers.

State Pensions are reviewed once a year for inflation and increased in April. The pension rate may be increased for a spouse. Pensions can be paid abroad, but increases in the pension rate has ceased for living in Australia because it no longer has a reciprical social security agreement with the UK.

When calculating your Australian taxable income, 8% of the UK state pension is a deductible amount, i.e. not assessable income.

Class 3 voluntary contributions can be paid every four or five weeks in arrears directly from a bank account or as a lump sum at the end of the tax year (with 42 days of year end).