Pension
The pension system of the United Kingdom, known as the “New State Pension,” is available to male employees born on or after April 6, 1951, and to female employees born on or after April 6, 1953, and retired after April 6, 2016. In addition to the above requirement, an employee must meet the criteria below for a minimum of 10 years:
- Work and pay for National Insurance
- To be a recipient of National Insurance credits
- Voluntarily pay National Insurance contributions
The full amount of State Pension an employee can receive is GBP 230.25 (British pounds) per week for the tax year 2025-2026. The New State Pension is typically paid every 4 weeks. Employees may be eligible for Additional State Pension if they defer claiming the pension beyond the State Pension Age.
The New State Pension scheme is funded through employees' and employers' monthly contributions to National Insurance. The minimum income for paying contributions is GBP 125 a week.
The United Kingdom introduced a new type of occupational pension plan - collective defined contribution (CDC) plans in August 2022. CDC schemes provide a target pension, if the scheme is under (or over) funded then the pensions it pays can be decreased (or increased accordingly). The Royal Mail Collective Pension Plan is the only CDC scheme authorized as of April 2025.
In addition, employers can also introduce private workplace pension plans, where a certain percentage of monthly income is contributed into a pension fund and benefits are paid upon retirement.
Dependents/Survivors Benefits
In the United Kingdom, the Widowed Parent's Allowance (WPA) is designed to support parents who have lost a spouse's income and experience a financial burden due to this loss. Eligibility to receive the WPA is contingent on the following:
- The spouse must have died before April 6, 2017.
- The individual must have been below the state pension age.
- The deceased spouse must have been a parent of a child and entitled to the Child Benefit.
- The spouse paid National Insurance contributions or died of a work-related accident/disease.
If a person's spouse or civil partner died on or after April 6, 2017, they are eligible for the Bereavement Support Payment, provided the deceased had paid at least 25 weekly contributions or died of a work-related accident or disease and the spouse is under retirement age. The benefit is paid as a lump-sum payment and then 18 monthly payments. If a person is entitled to receive the Child Benefit, the first payment is GBP 3,500, and the monthly payment is GBP 350. If they are not entitled to receive the Child Benefit, the first payment is GBP 2,500, and the monthly payment is GBP 100. If the beneficiary reaches State Pension age within 18 months of their partner’s death, they may get fewer monthly payments. The claim for this benefit must be made within 21 months from the death of the partner.
Invalidity Benefits
In the United Kingdom, there are 3 types of disability benefit programs:
- Disability Living Allowance (DLA)/Personal Independence Payment (PIP)
- Attendance Allowance
- Employment & Support Allowance.
The DLA is comprised of 2 parts: a care component, and a mobility component. Only people younger than 16 years can apply for DLA. When the person reaches the age of 16, they must apply for a Personal Independence Payment (PIP), which covers disabled people between the ages of 16 and 64. PIP also has 2 components: Daily Living Part and Mobility Part.
Attendance Allowance is granted to people who have a severe disability and must have someone to look after them. Employment and Support Allowance (ESA) is provided to people who have a disability or health condition that affects their work capacity. Employed, self-employed and unemployed people under the State Pension age can apply for this benefit.