The Intricacies of the Old and New UK State Pension System

Hiker in the Park

For UK expats, the state pension is an important consideration when planning your retirement income.

Working out your entitlement has become more complex following changes to the UK State Pension in 2016.

Anyone who reached state pension age by 5th April 2016 will be under the old system, whereas if you reach State Pension Age after this you will qualify for the new “single tier” state pension.

This change is complex and there are transitional arrangements which try to ensure that no one is disadvantaged by the move to the new rules.

What has changed?

The full new state pension is currently £164.35 per week as opposed to £125.90 under the old system.

It was possible to boost your pension under the old system through additional state pensions such as SERPS and the Second State Pension (you could also ‘contract out’ of these schemes).

To receive the full new “single tier” pension, 35 qualifying years of national insurance contributions or credits are now required (30 qualifying years were needed under the old system).

You must have at least 10 qualifying years to be entitled to any State Pension (only one year was needed under the old system).

Under the new system, it is no longer possible for your spouse/civil partner to claim based on your NI record. A person’s entitlement to the new state pension will be based entirely on their own contribution record.

The importance of this last point cannot by underestimated. Under the old system, where your spouse/civil partner hadn’t enough NICs to qualify for at least 60 per cent of the basic state pension, they may have been able to claim a pension based on their spouse’s/civil partner’s NIC record. This is no longer the case.

Checking and boosting your entitlement

You can check your entitlement through the government’s online service or by requesting a statement. An estimate is given based on your current NIC record and on the assumption that you will continue to make NICs up until you reach state pension age.

If you have a shortfall in your NI record, meaning you may not qualify for the full state pension, you can consider making voluntary NICs, however, eligibility rules apply.

You’ll carry on paying National Insurance for the first 52 weeks you’re abroad if you’re working for an employer outside the EEA, Switzerland and bilateral Social Security agreement countries, and you meet the following 3 conditions:

  • your employer has a place of business in the UK
  • you’re ordinarily resident in the UK
  • you were living in the UK immediately before starting work abroad

You might be able to pay Voluntary UK National Insurance contributions while you are abroad.

You must be eligible to pay voluntary National Insurance contributions for the time that the contributions cover, and can usually only pay for gaps in your National Insurance record from the past 6 years.

There are 2 Classes of Voluntary National Insurance Contributions:

  • Class 2 Contributions, currently £153.40 per year. You may be eligible to pay Class 2 contributions if you worked in the UK immediately before leaving, have previously lived in the UK for 3 years in a row and have paid at least 3 years of contributions
  • Class 3 Contributions, currently £761.80 per year. You will be eligible to pay Class 3 contributions if you have at some point lived continuously in the UK for 3 years and have paid at least 3 years of contributions

It is important to note that Class 2 contributions will be abolished with effect from 6th April 2019 (contributions for previous years will still be possible).

A more straightforward pension system

As can be seen here though, there are significant differences between the old and new schemes and it is important that you act now to make sure you maximise the pension you will receive.

To find out more about your UK State Pension entitlement and what you can do to boost it, talk to your AAM Financial Planner or email

Ian Black
Head of Financial Planning & Wealth Solutions
AAM Advisory


This article is an op-ed piece by Ian Black. The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any securities/products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of future performance. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data.