Uk pension how does it work

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How to invest, types of investing, buying and managing. Help with meeting goals, tax-friendly saving, saving for children. If you live and work in the UK, there are three main ways you might build up a pension that can help give you an income when you retire. These are the State Pension, workplace pensions and ones you set up yourself.

For more information on how the State Pension works, and when you might be able to get it, see our page State Pension. Call us free on or use our webchat. One of our pension specialists will be happy to answer your questions. Opening times: Monday to Friday, 9am to 5pm helpline , 9am to 6pm webchat. Closed on bank holidays. Most employers now have to offer their workers a pension under their automatic enrolment duties.

You can also do this if you want to save for your retirement and already have a workplace pension s. Generally, there are two different types of pensions that can be set up in the UK — defined benefit and defined contribution pensions. MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

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You should receive a letter four months before you reach state pension age, telling you what to do. If you have not received the letter two months before you reach state pension age, you should do the following depending on where you live:. Telephone the state pension claim line. Telephone the Northern Ireland Pension Centre. You can find the details on nidirect. If you start a UK state pension claim in the EEA country you live in, that country will pass details of your claim to the UK and any other countries where you have been insured.

Note that you do not need your National Insurance number to make your claim as the International Pension Centre can trace that for you. The form needs to be downloaded, printed, completed and then sent by post to the address on the form.

You can also ask the International Pension Centre to send you a copy of the form. You cannot email back the completed form — it must be posted. Alternatively, you can make the claim by telephone without having to complete the form. After dialling the helpline number , you should select Option 3. The state pension is taxable income in the UK. Whether or not you have to pay UK tax on your state pension depends on how much taxable income you have and whether you are UK resident or not UK resident for tax purposes.

The state pension is paid gross without deduction of tax. You can find more information on how to calculate your taxable income in the tax basics section. There is more information on tax residence in the pages on residence and domicile. If you are UK resident or tax purposes when you receive it, you will pay tax on any taxable income including your state pension that exceeds your personal allowance. If you are not resident in the UK for tax purposes and the country you live in has a double taxation agreement with the UK, you may not have to pay UK tax on your UK state pension.

You may, however, have to pay tax on your UK state pension in the country you live in. Another option is that you may have to pay both UK tax and tax in the country you live in on your UK state pension. However, you may be able to claim foreign tax credit relief if you pay tax in more than one country on the same income.

You can find more information on our page What if I am liable to tax in two countries on the same income? Each country has their own rules on when you can start to receive a state pension and how many qualifying years of social security contributions you need in order to be eligible. If you want to know about your own pension rights in another country, you should ask the authorities who run the pension scheme in that country.

When you claim your UK state pension, you should normally tell the pension authority about any periods when you have made social security contributions in another country. Just as the UK takes into consideration social security contributions made in other countries, other countries may take into consideration the contributions you have made in the UK. You should be aware that if you receive a foreign state pension while you are living in the UK, this may be taxable in the UK.

It may also be taxable in the country that is paying it, leading to double taxation. Please see What UK tax do I pay on my overseas pension? You can find more information about the taxation of foreign income in the UK and double taxation on our page What if I am liable to tax in two countries on the same income? The aggregation principle also applies for individuals within scope of the new UK-EU protocol on social security coordination, until at least the end of This will depend on the outcome of ongoing negotiations between the UK and these countries Norway, Iceland, Liechtenstein and Switzerland.

Charlotte paid social security contributions in her home country of France for several years. The UK then carried out a comparison calculation Method B. If Method B results in a higher state pension, the pension authority for that country pays the higher amount. Where this is the case, if you already qualify for a UK state pension as a result of your UK NIC alone, the aggregation principle will not increase the amount payable by the UK.

If you want more detailed information on general National Insurance topics, you can visit the following pages:. There are lots of state benefits in the UK that depend on you having paid a certain amount of NIC, not just the state pension. Like the UK state pension, it may be possible for your previous periods of insurance, work or residence in other countries to be taken into account when you claim other UK state benefits.

It is difficult to say with any certainty whether a particular benefit will be covered by rules similar to those for the state pension, as it depends on the agreement between the UK and the other country or countries involved. You should note that not all countries have agreements with the UK allowing such benefits to be claimed. Skip to main content. How does the UK state pension work for migrants? Updated on 27 October What is the UK state pension? Can I claim a UK state pension?

How does the UK state pension work if I have made social security contributions in another country as well as the UK? The state pension and countries with which the UK has a social security contributions agreement Similar arrangements as above usually exist with countries with which the UK has a social security contributions agreement.

How does Brexit affect my eligibility to a UK state pension? How do I claim a UK state pension? If you have not received the letter two months before you reach state pension age, you should do the following depending on where you live: Claiming from inside England, Scotland or Wales Telephone the state pension claim line.

Pensions advice Annuities Pension calculator Pensions scams and fraud State Pension Tracing old pensions What you can do with your pension pot Workplace pensions. Workplace pensions. There are two main types of workplace pension schemes: Am I eligible for a workplace pension?

How much do I need to contribute to my pension pot? What happens to my pension pot if I change jobs? When can I withdraw my pension? Can I leave my pension pot to my spouse or family? Will I still get the State Pension if I have a workplace pension scheme?

What should I do next? There are two main types of workplace pension schemes:. There are two types of occupational pensions: Money purchase or defined contribution schemes: your pension is put into investments e.

The pension provider pays you a certain amount every year when you retire. The number of employers offering these schemes has been in decline in recent years, although they are still common across much of the public sector. Am I eligible for a workplace pension? You can also make additional payments if you want to. How much are you saving for retirement?