The government has confirmed that it plans to change the rules on how state pension payments are made – but that will only affect some people.
This will change the way the payment is calculated if people move abroad, as the UK has now left the EU.
The state pension financially assists over 12.6 million people in the UK each month.
It is available to those who have reached the UK Government’s eligible retirement age, which is now 66 for both men and women, daily registration reports.
The GOV.UK guidelines declares that the change in the calculation of the state pension will affect people who move to live in the EU, EEA or Switzerland and those who have previously lived in:
The GOV.UK website confirmed that from January 1, 2022, you will no longer be able to count periods of stay in Australia (before March 1, 2001), Canada or New Zealand, in the calculation of your UK State pension if the two following conditions apply:
you are a UK national, EU or EEA citizen or Swiss national
you move to live in the EU, EEA or Switzerland as of January 1, 2022, including if you move to live in another EU, EEA country or Switzerland as of January 1 2022
The Department of Work and Pensions (DWP), which pays the state pension, explained the GOV.UK : “The change will affect you whether or not you have already applied for your UK state pension.
“Your UK state pension will be calculated, or recalculated if it is already in payment, using only your UK national insurance record. “
The DWP added that this change will have to be approved by the British Parliament.
Who is not affected by the change?
DWP states that you will not be affected by the change if you:
live in the UK – regardless of your nationality
are a UK national, EU or EEA citizen or Swiss national who was living in the EU, EEA or Switzerland on December 31, 2021
The advice states that as long as you continue to live in the same country, you will still be able to count the time spent in Australia (before March 1, 2001), Canada or New Zealand to calculate your UK state pension.
If you live in an EU or EEA country or Switzerland, your UK state pension will continue to increase each year based on the rate paid in the UK.
What are the current state pension payment rates?
State pension payments increased 2.5 percent in April.
This means people over 66 on the new state full pension now receive £ 179.60 per week, an increase of £ 4.40 from the 2020/21 rate of £ 175.20. This works out to an additional £ 17.60 per month and £ 228.80 for the 2021/22 fiscal year.
Anyone on the ‘old’ basic state pension (category A or B) now receives £ 137.60 per week – a benefit increase of £ 3.35 from the 2020/21 rate. This equates to an additional £ 13.40 per month and £ 174.20 for the 2021/22 fiscal year.
The annual increase is the result of the “triple foreclosure” rule, which is a guarantee that currently ensures that the state pension does not lose value due to inflation.
There have already been calls to remove or change the triple lockdown decision in the wake of the coronavirus pandemic, amid fears it will become too expensive to maintain.
The rules of triple locking mean that the payout increases each year by the highest value of:
If you want to know how much state pension you will receive and when you can retire, use the online forecasting tool here.