Forces Pension Society – Monitoring your pension

In her last article for Civvy Street, Mary Petley, of the Forces Pension Society explained how your Armed Forces pension keeps pace with inflation once you have left the Armed Forces. In this piece she sets out how State Pensions keep their value over time.

Since 2016, when the new Single Tier Pension was introduced requiring you to pay higher National Insurance Contributions (NICs), the criteria have required 35 years’ worth of NICs to qualify for the full Single Tier Pension.

If you contribute for more than 10 years (about eight of which must be at the higher rate) but less than 35, you will receive a proportion of the full Single Tier rate commensurate with the NICs you have paid. Anyone who has less than 10 years’ contributions in total or from April 2016 will not qualify for anything from this scheme.

In 2010 a formula called the ‘Triple Lock’ was introduced to calculate the annual increase to State Pensions. The ‘Triple Lock’ mechanism, which has been used every year except 2022 when COVID 19 distorted the figures, provides for an increase worth the best of: 2.5% Consumer Price Index (CPI) or average pay growth.

That means, using this formula, that the Single Tier Pension rose by 10.1% (which was the CPI rate announced by the Government in October 2022) in April 2023 giving a revised rate of £203.85 per week (just over £10,600 per year).

You are probably a long way from reaching your State Pension Age (SPA) but it is not a bad idea to check your contribution record which you can do online at: www.tax.service.gov.uk/check-your-state-pension

If you have had no breaks in your Armed Forces service, your NIC record for that period should be complete. If it is not, you need to challenge it and you will probably need the help of DBS to prove what has been paid on your behalf. If there are gaps in your record that should be there – for example, you took an unpaid career break – you can buy back up to six years’ NIC ‘cover’ by means of paying Voluntary Contributions (Class 3 NICs). More information about Voluntary Contributions can be found at: www.gov.uk/voluntary-national-insurance-contributions

Finally, SPA can change, so it is a good idea to check yours from time to time. It is quick and easy to do. Visit: www. gov.uk/state-pension-age to keep yours under review. You can also obtain a State Pension forecast online at: www.gov.uk/check-state-pension – and this could be of particular interest to those of you who will not have paid the higher rate of NICs long enough to qualify for the full Single Tier Pension rate and do not intend working or paying Voluntary Contributions once you leave the Armed Forces.

If you are a Member of the Forces Pension Society and have pension questions, email us on: pensionenquiries@forpen.co.uk
If you are not a Member but would like to learn more about us, visit our website:
www.forcespensionsociety.org