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State Pension payment arrangements

Published Thursday, October 26, 2017

Looks at the day at and frequency with which the State Pension is paid

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The State Pension is a weekly benefit, paid in multiples of a week.

For people who reached State Pension age before 6 April 2010, it can be paid weekly in advance or four weekly in arrears. Payments start from the payday (normally Monday) after the date on which the person becomes entitled to their pension. It is then paid on each subsequent payday, including the week in which they die. In some cases there will be a few days for which pension is not received at the beginning; in others there will be a few days for which pension is paid after death. On balance there is no saving to the Exchequer from this method of payment.

For people reaching State Pension age on or after 6 April 2010, a payday is allocated according to the final two digits of the customer’s National Insurance number. Payment is weekly, fortnightly or four-weekly in arrears. A part-week payment can be made at the start of the claim for people who move onto the State Pension from a working age benefit.

 The arrangements changed again when the new State Pension was introduced for people reaching State Pension age on or after 6 April 2016. For people entitled to this, there is no gap. Although they may have to wait a few days for their first payday (as before), they will receive an amount in arrears to cover the gap (Explanatory Memorandum to SI 2015/1985)

The Government’s preferred payment method is direct into a bank, building society or credit union account:

Owen Smith: To ask the Secretary of State for Work and Pensions, how many Post Office card accounts have migrated to mainstream bank accounts to date.

Caroline Dinenage: Direct Payment into a bank, building society or credit union account is the most efficient, cost effective and preferred way to make pension and benefit payments. The department is writing to some Post Office card account users about receiving their payments this way and around 440,000 have provided alternative payment details. PQ 108720 24 October 2017

Payment into a Post Office Card Account will remain an option until at least 2021:

Owen Smith: To ask the Secretary of State for Work and Pensions, whether his Department plans to continue to pay benefits and pensions into Post Office card accounts until 2021.

Caroline Dinenage:In 2014 Government committed to maintain POca until at least 2021, to ensure that people who cannot use a mainstream account can continue to access their benefits and pensions. Government’s existing POca contract with the Post Office, which expires in November 2021, has an option to be extended for up to 3 years to 2024. A decision on any extension will be taken at the appropriate time, informed by both customers’ needs and the need to make sure the taxpayer sees Value for Money. (PQ 108721 24 October 2017)

 

 

Commons Briefing papers SN00260

Author: Djuna Thurley

Topic: Pensions

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