Settlement and the State Pension

What the Pension Depends On

Settlement removes the no recourse to public funds condition, but the State Pension is a contributory benefit and was never behind that condition in the way that, say, Universal Credit is. What determines it is your National Insurance record.

GOV.UK publishes three figures:

• 10 qualifying years: “You'll need 10 qualifying years on your National Insurance record to get any new State Pension.”
• 35 qualifying years: the number needed for the full rate, for records started after April 2016. People who were contracted out before 2016 may need more.
• £241.30 a week: “The full rate of new State Pension is £241.30 a week.”

Between 10 and 34 qualifying years you get a proportion. Your own record and forecast are on the GOV.UK State Pension forecast service.

How Qualifying Years Are Built

• Employment. Class 1 contributions are deducted through PAYE where earnings are high enough.
• Self-employment. Class 2 and Class 4 contributions.
• National Insurance credits. Awarded in some circumstances, including certain periods of caring, illness or unemployment, and they can produce a qualifying year without any contribution being paid.
• Voluntary contributions. Class 3, and Class 2 for some self-employed people, can fill gaps. The rules on how far back you can go are on the GOV.UK voluntary contributions page. See our contribution gaps guide.

Someone who arrived on a 5-year route to settlement, working throughout, will normally have built about 5 qualifying years by the time settlement is granted. That is half the minimum, not a fifth of a full pension, so the shape of the arithmetic matters more than the headline number.

Time and Contributions Abroad

GOV.UK says time spent making contributions in the following countries “can be added to the qualifying years in your UK National Insurance record”:

• The European Economic Area, meaning the EU countries plus Norway, Iceland and Liechtenstein
• Switzerland
• Any country with a social security agreement with the UK

Time spent living in Canada, New Zealand or Australia before 5 April 2001 can also count, subject to residence and nationality conditions that the Department for Work and Pensions checks when you claim.

This is aggregation for the purpose of reaching the minimum. It does not transfer another country's pension into the UK one.

State Pension Age

GOV.UK does not publish one age that applies to everyone. It provides a checker that gives your own date, and says: “The State Pension age is regularly reviewed, so the results of this tool may change in the future.” Check yours on the GOV.UK State Pension age tool.

Retiring Outside the UK

The pension is still payable abroad. Whether it rises each year is the part that varies. GOV.UK says yearly increases apply if you live in:

• the European Economic Area
• Gibraltar
• Switzerland
• a country with a social security agreement with the UK, other than Canada and New Zealand

It then says: “You will not get yearly increases if you live outside these countries.” It adds: “Your pension will go up to the current rate if you return to live in the UK.”

Anyone planning to retire to a country outside that list should check their own position with the International Pension Centre, which is the contact GOV.UK gives, and read the GOV.UK rates page for the current list. Country lists change, and the list on GOV.UK is the one that decides it.

Settlement, Absence and the Pension

One immigration point does bear on retirement plans. Settlement lapses after more than 2 continuous years outside the UK, and coming back after that needs a Returning Resident visa costing £726. Settled status under the EU Settlement Scheme instead lapses after 5 continuous years, or 4 for Swiss citizens. British citizenship does not lapse through absence at all. See our returning residents guide and our citizenship guide.

Workplace Pensions

Automatic enrolment into a workplace pension applies to eligible workers regardless of nationality or immigration status, and employer contributions come on top of the State Pension. See our employment rights guide and our rights and benefits guide.

Questions and answers