Thursday, 22 September 2022


Some householders who get the means-tested benefit Universal Credit will keep just 24p of every pound extra they earn – an effective tax rate of 76% - this tax year and next. In some parts of England it could be more - losing up to 78.6p in every pound that is earned, leaving them with barely 21p for every extra pound they earn. Those losses could undermine the work incentives which the new system is designed to create. 

For graduates on incomes high enough to make repayments on their student loan but low enough to get Universal Credit, the deductions would be more, leaving them with less than 27p in the pound. Worst case would be earn £1 keep less than 19p.

Universal credit
Universal Credit has been rolled out from October 2013 to replace six means-tested benefits and tax credits. Now after Covid and the lockdowns it is claimed by around five million people. It is the benefit given to almost all new claims for help with income or rent. It is paid to people on low incomes who cannot work, are looking for work, or work on low or modest pay and have children.

It is supposed to let people keep more of what they earn and thus boost incentives both to return to work and to earn more once in work. For every £1 extra earned the credit is reduced by 55p from 24 November 2021 allowing the claimant to keep 45p. Before that it was 63p and had been 65p. This so called ‘withdrawal rate’ of 55p in the pound is said to be much lower than rates under the previous and allowing people to keep 45p of what they earn is seen as an incentive to work. However, that figure of 55p withdrawal rate is only accurate for people who earn less than £242 a week and are not householders.

There is one complexity to be aware of. People with a child or children and people who re judged to have 'limited capability for work' get what is called a 'work allowance'. This is not extra money but is simply an amount they are allowed to earn before the taper kicks in. It is set at £344 a month if universal credit includes help with housing costs and £573 a month if it does not. So those people can earn up to those amounts and the taper will not apply to those earnings. It does apply though to every pound earned over those amounts. And for everyone else the 55% taper applies to the first pound. 

Universal Credit is worked out after tax and National Insurance have been deducted. In 2022/23 anyone earning more than £242 a week pays National Insurance and income tax. From 6 November employee's National Insurance rates are being reduced to 12% from the 13.25% which applied from 6 April 2022 to 5 November 2022. That extra 1.25%pts does not sgnificantly affect the calculation for those seven months. National Insurance takes 12p in the pound and income tax which begins at the same level takes another 20p in the pound before their Universal Credit is worked out. That leaves £68. The universal Credit taper then reduces their benefit by 55% of that net amount. The total loss from NI, income tax, and reduction in Universal Credit is just over 69p from each £1 they earn. So they keep less than 31p. But that is only part of the picture.

Universal Credit, despite its name, does not replace all means-tested benefits. It does not replace the means-tested reduction in council tax which used to be called Council Tax Benefit but since 1 April 2013 has been replaced by a similar scheme which is now called Council Tax Reduction and is operated by local councils. Like all means-tested benefits Council Tax Reduction is withdrawn as income rises. The standard taper is 20p for each £1 rise in net income (after the tax, NI, and Universal Credit withdrawal). In other words for each extra pound of net income help with council tax is reduced by 20p. The result is that for each £1 earned a total of nearly 76p disappears in tax, NI, reduced Universal Credit, and reduced Council Tax Support. The calculation is at the foot of this blogpost.

In some areas of England and Wales the reduction for every £1 of income earned may be even higher as local councils struggle to save money by raising the taper from 20% to as high as 30%. In areas which raise the Council Tax Reduction taper to 25% householders on Universal Credit who pay tax will find that 77p of each pound earned disappears in deductions. In areas with a 30% taper they will lose nearly 79p and keep barely 21p for each extra pound earned after deductions for income tax, National Insurance, Universal Credit taper, and reduced Council Tax Reduction. 

Students with a Plan 1 or Plan 2 student loan make repayments of 9% of on every pound they earn above a threshold (currently £388 a week for Plan 1 and £524 a week for Plan 2). That is in effect an extra 9% tax and those whose income is low enough to be entitled to Universal Credit lose typically 73p in the extra pound keeping just 27p. If they pay council tax then they keep less than 21p and in areas where the council tax withdrawal rate is 30% they keep just 19p of every extra £1 they earn.

It is a tax
Some people object to the deductions made from a means-tested benefit being called a 'tax'. They say that the taper rate reduction in a subsidy from taxpayers is not a tax. Tax, they say, means a levy on your own money not a reduction in the money the state gives you. 

But it is a tax. And officially so. In his Spring Budget, 8 March 2017, Chancellor Phillip Hammond confirmed that the tapered loss of this benefit was a tax. He confirmed the reduction in the taper rate by saying "the Universal Credit taper rate will be reduced in April from 65% to 63%, cutting tax for 3 million families on low incomes." These words were echoed by Chancellor Rishi Sunak in his Autumn Budget on 27 October 2021 "This is a tax on working people -- and I'm cutting it from 63 to 55 per cent...Let us be in no doubt: this is a tax on work. And a high rate of tax at that."

So it is a tax. And a high one. 

Losing 76% or more of each extra pound you earn is hardly an incentive to work or to work harder. It is almost twice the 42% tax and NI deductions for higher rate taxpayers with incomes over £50,270, three times the minimum wage.

Net after tax
UC reduction
Net after UC
CT Reduction
Effective tax

This blogpost replaces the one originally published 19 September 2012.

17 October 2022
Version 3.3

Wednesday, 4 May 2022

FILL THAT GAP - if you reach pension age from 6 April 2016


These rules apply to men born 6 April 1951 or later and women born 6 April 1953 or later. if you are older than that it is too late to fill gaps in your National Insurance record - see different rules for older people

You need 35 years of National Insurance contributions to get a full state pension. If you have fewer than 35 years National Insurance contributions you will get a reduced pension. So if you have 21 years you will get 21/35ths or 60% of a full pension. If you have less than ten years you will get no pension.

It may be possible to pay some extra contributions now to fill some or all of that gap. They are called voluntary Class 3 National Insurance contributions. 

Contributions at work
You will have got National Insurance contributions by being in work and paying full Class 1 contributions. You may not even have noticed as they are just deducted from you pay. If you earned very little then no National Insurance contributions would have been paid. For a band of earnings below where you actually started to pay them then you would have been credited with them. 

Reduced rate contributions paid by some married women do not count. If you have gaps caused by paying those contributions you cannot fill them. It was a very unfair system but nothing can be done about it now.

If you were self-employed and paid Class 2 contributions they count towards your pension equally with Class 1.

Some people who did not pay contributions were credited with them. The rules about credited contributions are very complicated. But broadly speaking you may be able to get credits for years you 
  • Got child benefit for a child under 16 (that changed to under 12 from 2010)
  • Were unemployed and looking for a job. Usually you would be on Jobseeker's Allowance - but you may get credits even if you were not 
  • Were on employment and support allowance, or were eligible for it, or got statutory sick pay
  • Received working tax credit 
  • Cared for someone who was sick or disabled
  • Got maternity or paternity benefits 
  • Were male and did not work in the few years approaching the age of  65.
Some credits are given automatically; others have to be claimed. The website publishes a full list of credits and which have to be claimed. There are also details of how to check your record. It is all ridiculously complicated but can be very worthwhile!

If you find you still have gaps in your National Insurance record and you have less than 35 years contributions you may be able to fill them now. 

Seventeen years back
You can pay contributions back to 2006/07. Each tax year from 2006/07 to 2019/20 will cost you £824.20. Contributions for year 2020/21 will be £795.60 and for 2021/22 will be £800.80. The cost to pay voluntary contributions to fill the current year 2022/23 is £824.20.

You must buy the extra contributions by 5 April 2023. After that you will only be able to buy them back to 2017/18. You cannot buy contributions for the tax year in which you reach state pension age or any later year. 

Should you pay?
It is complicated to decide if it is worth paying to fill gaps. If you have fewer than 30 years contributions under the old system before 2016/17 it is probably only worth filling old gaps to bring that up to 30. However, in some circumstances it may be worth filling old gaps to bring it up to 35. If you can do so it is always worth filling gaps up to 35 by paying contributions from 2016/17. And it may be worth ensuring you pay contributions under the new system even if you have 35 years contributions and you have spent some time paying into a good company or public sector pension scheme. That is explained in another blogpost.

In exchange for one year's contributions you will get extra pension of £5.29 a week (£275 a year) from the date you pay. So the payback time for the cost of the contributions is three years - add nine months if you pay basic rate tax or two years if you pay higher rate tax. The pension you buy should rise by at least 2.5% a year until April 2024/25 and after that in line with earnings or possibly prices depending what a future government decides. 

More information
Paying Class 3 voluntary national insurance contributions

4 May 2022
vs. 2.01

Monday, 2 May 2022


Many local councils in England have failed to pay the £150 council tax discount to help with fuel bills by the original deadline of the end of April. The money is due to go to households in Council Tax bands A, B, C, and D.

The Chancellor Rishi Sunak told Parliament six times on 3 February that £150 would be paid 'in April'. He announced it by saying 

We are going to give people a £150 council tax rebate to help with the cost of energy in April, and this discount will not need to be repaid (Hansard col.472).

Answering questions from MPs he repeated five more times that the money would be paid 'in April', explaining to one MP  

By using the council tax system, we can get money to people faster - £150 in April (Hansard col.479).

Later at a Downing Street briefing and in an interview on BBC Newscast he repeated that it would be given 'in April' . The Treasury confirmed that date in a tweet 

In April, 80% of UK households will get a £150 council tax rebate to help manage rising global energy costs.

The Treasury used exactly the same wording on its Facebook page of 3 February and linked to a video of the Chancellor saying to the camera 

Secondly, in April, we're going to give a £150 council tax rebate to households in bands A to D to help with the immediate costs of energy.

A Factsheet issued by the Treasury at the time (a Treasury press officer referred to it in an email to me on 3 February as 'our factsheet') also confirmed the money would be paid 'in April'. 

A Council Tax Information Letter dated 14 February 2022 from the Department for Levelling Up, Housing & Communities (DLUHC) to local authorities in England says

On 3 February 2022, the Department issued a Council Tax Information Letter (CTIL) summarising the Government’s announcement that an Energy Bills Rebate will be provided to households in England in April 2022 to help protect them from rising energy costs.

Deadline changed
But at some stage the Treasury Factsheet was amended to the one now available online with a url indicating it is 'v.2' and the deadline has been changed to 'from April'.

Despite the evidence of Parliament, Twitter, Facebook, and the Factsheet that the original deadline was to pay the money 'in April' the Treasury claimed in a statement to journalists on 30 April 2022 that 

We’ve always been clear...that the £150 council tax rebate to help with the cost of living would be paid “from” April.

It referred to its press release of 3 February which did use the phrase 'from April'. But in Notes to Editors (labelled 'Further Information' in the version now online) it added 

We expect the vast majority of people who pay by Direct Debit to receive this money in April...for households in Bands A-D who do not pay by Direct Debit, their councils will be ready to process their claims in April.

Later guidance from the DLUHC also uses the phrase 'from April'. 

All Council Tax Rebate grants should be paid as soon as possible from April 

Original deadline missed
It is the original deadline set by the Chancellor and the Treasury of 'in April' which local councils up and down England have not met. Some did pay in April, others have said it will be May or even June before households on Direct Debit are paid and it could be as late as 30 September before those who pay in other ways get the £150. The end of September is the final deadline set by the Government for the payments to be made and after that it has made clear that any money not spent by councils on the rebate by 30 November 2022 would be taken back.

What to do
If you live in a band A-D home in England and are still waiting for your council tax Energy Bills Rebate the councils do not want you to call them. Check your council's website, though many of those I have seen have only very sparse information. 
  • If you pay by Direct Debit the rebate should be paid automatically. If it has not been credited to your bank account by the end of June you should contact the council and ask when you will be paid. Remind the council that the Chancellor and the Treasury initially promised the payment 'in April'.
  • People who do not pay by Direct Debit will probably have to wait longer. This group will include pensioners who get their council tax reduced to zero because of their low income. If the council has not contacted you by the end of June to ask for bank details then you should call the council and ask why. Remind the council that the Treasury said councils would be ready to process these claims 'in April' and that 'almost all households should see the full benefit by May'.
If you live in a band E, F, G, or H home but you are in hardship and need help with your energy bills you will have to apply to the council for money from the Discretionary Fund which the Government has provided to all councils in England.

Rest of the UK
In Scotland and Wales the payment is due to everyone in a band A-D home and is extended in both countries to people in higher bands E-H who get council tax reduction due to their low income. Both countries also have some extra funding to help those who fall outside the scope of the payment but are still in hardship. 

In Scotland councils can make the payment by reducing the council tax bill by £150 and many have done that. 

In Northern Ireland there is no council tax and no decision has yet been taken about how the payment will be made.

Version 1.10

3 May 2022

Tuesday, 26 April 2022




 Paul  Lewis

Originally published Saga Magazine, September 1993, pp. 18-22.

Nikolay Andreevitch Yasinsky’s apartment is set back from Parkovaya Street 15th, so called because it is the fifteenth of sixteen parallel streets all called Ulitsa Parkovaya or Park Street which hatch the space between Moscow’s outer ring motorway and a long wide road called Okrusnoy Avenue. To the north lie the remains of the natural woodland on which this estate was built and the blocks of flats on Parkovaya Street 15th seem to have been placed among the fully grown trees without disturbing any that were more than six feet from their walls. 

War veteran Nikolay Andreevitch. He lost his leg during the battle to relieve the siege of Leningrad, but today he cannot afford to buy the vegetables he needs. 

Trees are the redeeming feature of Moscow’s dilapidated blocks of dreary flats which officially house nine million and actually accommodate thirteen million. They need redemption. At each address there are several buildings, set back from the road. Nikolay’s is a good 200 yards from the pavement along unmade roads relieved by scrap cars, earth playgrounds, and large rubbish containers. Four doors lead into his building. Through the first and up six short flights of stairs is apartment 85, building 5, number 42, Parkovaya Street 15 — home to Ukrainian Nikolay, aged 72.

He lost his left leg fighting to relieve the siege of Leningrad. “Where Pushkin was wounded, Black River” — he is proud to have been wounded at such an illustrious place. There is no lift in the building and the red and yellow tiles on the concrete landings and stairs are broken and uneven. On every other half-landing there is a rubbish chute. His front door is well locked and leads to a small hallway which gives on to a tiny kitchen, through which there is a balcony with a few plants. A second door leads to the bedsitting room where his small box bed is part of his daytime furniture. A table covered with an old carpet and a cheap settee fill the rest of the room. The finest objects are large, framed photographs of him and his wife taken before the war.

He has three rooms, though all are less than 12 feet square. One was his and his wife’s, one was their daughter and son-in-law’s, the other was for his grandson, his wife and their two-year-old daughter. Seven people crowded into three rooms, a typically crowded Moscow family flat. But last year his wife died of cancer and his daughter died of diabetes. A few months later his grandson, a soldier, was killed in a shooting accident and his widow and their baby have moved back to live with her parents. Now Nikolay Andreevitch lives alone with his son-in-law Viktor Mikhailovitch. The three-roomed apartment is too big for just the two of them. He weeps at the memory of the loved ones he has lost.

Nikolay’s pension is enough, he says. He gets 24,000 roubles a month — his flat costs him just 85 roubles a month. Over the last year all flats in Moscow have been privatised by the simplest possible means — handed over to the tenants. The 85 roubles covers heating, water, and rubbish collection. In addition, he pays 20 roubles for electricity and 106 roubles for the phone. Local calls are free. With the basics taken care of, Nikolay still has almost all the 24,000 roubles a month left for living.

It is impossible to say simply what a rouble is worth. If you go into a bank with pounds sterling you can buy 24,000 roubles for about £14 so his pension is little more than £4 a week. But all state services, such as the flat and electricity, are very cheap. A ride on the Metro, Moscow’s efficient underground railway costs six roubles, about a third of a penny, for any distance. A ride on a trolleybus or tram is four roubles. Conversely fruit, for example, is very expensive. Two pounds of apples will cost 2,000 roubles, a twelfth of a month’s pension. Even a pint of milk is expensive at 80 roubles, a 2lb bag of sugar costs 355 roubles. But Nikolay Andreevitch doesn’t think in such quantities. “Five small carrots are 100 roubles. I need vegetables but I cannot have them. I need the vitamins and I cannot buy them in the chemist.”

Nikolay’s pension is enough for his needs because his diet is very poor. He never eats fruit, he doesn’t like meat. It is just as well. Ham is 3,784 roubles a kilo at a local shop. At about 25p a pound it sounds cheap, but not if you are living on £14 a month. Nikolay Andreevitch lives on vegetable soup, porridge, which Russians eat as a main course, potatoes and, at 24 roubles each, eggs. He never goes out, except to return to his factory for some company during the day.

He says, “I fought in the war. I was honoured at work. I was a technician in a textile research plant and factory. But now life beats me greatly. I don’t know why God does it. Under Stalin, after the war, he told us the price of bread. And prices came down each year. Now inflation has robbed us. My wife and I had 5,000 roubles each in the bank. It was good savings. Now it is worth nothing.”

The rate of inflation in Russia is hard to grasp. Although it is now falling, it was 2,600 per cent in 1992. Something which cost 100 roubles in January cost 2,700 roubles in December. To try to cope with the effects, the Government raises the pension every three months. Pensions are now ten times what they were nine months ago and sixty times what they were two years ago. If we had inflation at the same level in Britain, the basic retirement pension would have risen from £52 in 1991 to £3,120 a week in 1993. Despite the frequent increases in pension, inflation soon destroys its value —by one third at the end of the month in which the pension is paid; after three months when the next pension rise is due it is worth less than half its original value.

Nikolay had a reasonable job and his war injury ensures that his pension is higher than the pay of many people still in employment. Other Russian pensioners are not so fortunate, you can see them in their hundreds round every Metro station, in the subways beneath Moscow’s broad avenues, and lining the busier streets. The city’s poor have joined the market economy with a vengeance to try to scrape a living with a few extra roubles. Some sell small bunches of cut flowers; others offer second-hand clothes, a few sell kittens. But mainly they sell food.

They even sell food outside Moscow’s central market in Svetnoy Boulevard. Inside the market, pyramids of glossy fruit and plump vegetables are a testimony to the fertile diversity of Russian soil and climate. The market has always been here, even under the communist regime, and its Georgian stallholders have a reputation for hard bargaining and high prices. On the street outside, it is different.  

Lubov Vassilievna takes all day to sell a couple of loaves and some milk — she makes 17p.

Widow Lubov Vassilievna, 79, wears a colourful scarf and an orange-coloured cardigan over a print dress. Her wares are displayed on a cardboard box: one loaf and a one litre carton of milk. In her bag there are two more of each. It takes her all day to sell them and she makes less than 300 roubles (17p). She worked for 20 years in a shoe factory after bringing up her children. Her pension is 8,000 roubles (£4.45) a month. She told me, “I cannot remember when I last ate meat or sausages. I eat milk, potatoes, and bread but no butter, just oil to fry them in. I have no fruit or vegetables but I may be able to afford them later in the year when they get cheaper.”

Russian pensions are related to earnings. A wife who has a pension of her own gets no widow’s pension when her husband dies. Lubov Vassilievna is suffering from widowhood after a short, low-paid, working life when her children had grown up. Perhaps the children helped her now? She smiled: “I have a daughter, a granddaughter and two great grandchildren. I help them from my pension and what I make here. They need help because of the expense of everything and the new problem of unemployment. Soon I will be 80 and I am looking forward to that because my pension will be a bit more then. My main worry is that I have high blood pressure and medicines are very hard to get. It is a worry to know that you cannot get them when you need them.”

Like most of the women lining this busy thoroughfare, Lubov sells food on the street which she has bought in ordinary shops. Her customers are workers who are too busy or too lazy to queue for it themselves. Although there are no longer the chronic shortages and long queues which characterised daily life under communism, buying food is still a lengthy process. Choice is very limited in the small, local grocery shops which are all called, simply, Produkti (products).

One of these is nearby in a dirty, drab building. The windows are empty. Inside there are three counters: one stocks milk and cereals, another meat, mainly dried or preserved in some way, and a third vegetables. There are just six or seven different items at each counter with half a dozen people queuing for them. Patches of bare concrete show through the broken floor tiles; some new plastering is left unpainted. If the lighting had not been so poor, it would look even worse. Prices displayed on torn pieces of rough card show that butter is 1,180 roubles a kg (30p a pound), tea is 231 roubles for 100g (14p a quarter), and sugar is 355 roubles a kilo (9p a pound). The prices seem low when converted into sterling but they are not when they have to be found out of a pension consisting of just a few pounds a month.

At each counter there is a small queue. Occasionally, a veteran or disabled person goes to the head of the queue, which by convention they may, and they will be served at once. Others wait patiently. Once the few items have been chosen and the price calculated, either mentally or, in difficult cases, on an abacus, the customer is given a ticket. This process is repeated at each counter and the tickets must be taken to yet another queue at the central cash desk. In turn, the totals on the tickets are added — on another abacus — before the total is finally entered on a new Casio till! The customer takes the receipt to each counter in turn to collect the groceries. By enduring this long process then re-selling the goods on the street for a small profit, Lubov, like thousands of other women across Moscow, sells her time and patience to supplement her pension.

Fifty yards in front of the Izmaylovo International Hotel is the Ismaylovskaya Metro station. Forty women stand in two lines like an honour guard for the passengers emerging from its entrance. Maria, 63, holds aloft a large salami and a small plastic bag full of tomatoes. Occasionally a passer-by shows interest and asks the price. “My pension is 10,000 roubles (£5.55) a month because I had a low-paid job in a meat factory where I worked for 15 years. My husband died two years ago. I am here maybe two or three times a week, I make perhaps 1,000 or 1,500 roubles (55p-83p),” she said. Next to her is Alexandra, 70, selling milk. “My father was imprisoned by Stalin. He was taken when I was 14, so I had no education and could not get a good job, so I have a small pension. I buy milk in the shop for those who have not got the time to queue. I think this is a good use of my time and I make a few roubles.”

Not everyone buys the produce they sell. Outside a cheese shop in the south suburbs of Moscow, Ivan Mikhailovitch sits in front of a box on which are three portions of rocket, a kind of wild lettuce, replenished by the sackful. “My pension is 10,000 roubles (£5.55). I collect this in the woods and then sell it here two or three times a week. It is 50 roubles (3p) a portion.” 

Ivan Mikhailovitch supplements his pension by selling wild lettuce. He makes around 3p a portion.

 If the central market is the best in Moscow then Tishinksky market is the worst. On a piece of waste ground, in front of derelict buildings, using sheets of newspaper for stalls, Moscow’s poor sell to each other: rusty blunt drill bits and a handful of used brake shoes. Sergei, is selling his grandchildren’s old shoes, three out-of-date reel-to-reel tapes for which he claims to have a buyer, and four small steel hinges. At the entrance a woman sits in front of a small tray on which are various boxes of medication, dirty and old, but items which are hard to find in Moscow’s chemist shops.

Inside the market is Praskovia Ivanovna who lives alone in a one-room flat and sells empty 1.5 litre plastic bottles for 15 roubles each (less than 1p). Aged 80, her pension is 15,000 roubles (£8.33) a month. It is enough to live on, she says, but adds: “I haven’t eaten a tomato all year because they are too expensive. I sell my things here for almost nothing.”

A recent survey by the charity Care International found that pensioners living alone were the most vulnerable here. In the south west corner of Moscow, near the university, the International Protestant Church organises a modest response to this problem, providing meals for Moscow’s poorest and loneliest pensioners in what it calls a soup kitchen – a stolovaya or canteen. These stolovayas provide more than 10,000 meals a day to needy, people, mainly pensioners. The stolovaya I visited feeds 300 each lunchtime, staffed by volunteers and students, many from Nigeria who are in Moscow studying engineering. On offer today is a thin vegetable soup, plain pasta served with thick brown porridge, a hard boiled egg, two pieces of dark bread, and a glass of tea.

Anna Nikolayevna Volodina, 81, wears a white patterned scarf tightly drawn over her round face. Her black dress is old and worn and covered by a blue cardigan. Her shoes are thin. The Russian language has a wonderful term of love and respect for its older women — babushka or grandmother. If anyone personifies it, Anna does. She looks at her soup, pasta, and porridge and peels her egg. “The food here is very delicious,” she says. “I worked all my life in the Dulova china factory where I painted designs on cups and plates. After I retired I got 52 roubles pension and that was plenty. Now I get 8,000 roubles (£4.44) a month and it is not enough. I respect those who work in factories, but I do not respect these businessmen and speculators. They are really workers but they don’t want to work.”


Anna Nikolayevna Volodina personifies the Russian Babushka (grandmother). The stolovaya’s (soup kitchen) food is “very delicious”, she says.

 Her family, two sons and numerous grandchildren and great-grandchildren still live in Dulova, about 60 miles from Moscow. She remarried a Muscovite late in life and is now a widow but now that she is registered as a Moscow resident it is hard for her to move away.

“My sons don’t help me because they have many children themselves. One is a mechanic but wages are low and unemployment is now a constant fear. I live in a communal flat, I have one room and there are two other rooms with young men in them. We share a bathroom and kitchen. They don’t help me. No, if I’m not careful they would steal from me. I have bread and butter and tea for breakfast but I do not have enough to eat — the food here is very good. Hot meals of the sort I like. Really I am young, my life is young, I am hoping to live a very long time. I am always smiling and that is the important thing.” Her deeply lined white face breaks into a smile as the beauty and mischief break through the patient endurance of this wonderful babushka.

When flats were allocated by the state, the housing shortage was dealt with by putting childless people in communal flats. Unrelated, and often incompatible single people or couples, like Anna and her flatmates, would share three rooms, with common facilities, waiting for the time when they could get some privacy. It could take years but technically they were “housed”.


Viktor is homeless. He lost his documents so he receives no pension. “I sleep where I am”.

Now that the state no longer controls housing, there is real homelessness. Viktor is 57 and an epileptic. Married twice and an officially registered resident of Moscow, he is homeless. His dark face framed by a flowing brown beard, his dark-coloured, thick clothes and shoes tied with string. He smells of strong Russian tobacco. He eats at the stolovaya. “I was a carpenter. I have been married twice but now I sleep where I am. All my documents were stolen so I get no pension. Sometimes I collect old bottles and return them for a few roubles. Or I just beg. I get perhaps 100 or 200 roubles (5p-11p) a day. I eat here free but at other canteens I must pay 72 roubles (4p) for a plate of soup.”

John Melin is a Lutheran minister from Minneapolis, currently resident with the International Protestant Church in Moscow which runs the stolovaya. As people come and go they thank and praise him for his kindness. One woman stops to say, “I have worked for 63 years yet I have to come here for my food. God bless the church and God bless the Americans who help us.”

John explains, “We wanted to share with the people who were needy during the difficult transition from communism. This soup kitchen is our response to that need. We provide healthy traditional meals for 15 to 18 cents (10p-12p) each. Every dollar we are given goes straight to those in need. It is a food sharing ministry and I want to stress we provide service not just food, an opportunity to talk with people. Here they can sit, and be served, and talk. We do not proselytise. Our witness is in our service.”

A soup kitchen can never be more than a stop-gap measure to deal with the economic problems which create the terrible poverty prevalent in Moscow. Under the communist system, the welfare of older people was shared be-tween relatives and an elaborate system of organised care. Charities and voluntary organisations were banned by a state which had to seem to provide everything its people needed. But when the communist regime collapsed following the rapid political changes which followed the attempted coup in August 1991, the structures it supported went with it. The gap is slowly being filled by charitable efforts, according to Megan Bick, director of the Moscow office of the BEARR Trust (British Emergency Action in Russia and the Republics), an English charity devoted to helping the countries of the former Soviet Union.

Megan said, “The Trust keeps in touch with the local needs and channels help, from people in Britain, such as money or goods or technical aid about how the voluntary sector works.”

Prospekt Mira, or Peace Avenue, is a broad boulevard running due north out of Moscow past the exhibition of economic achievements which lies beneath a soaring titanium statue of a space rocket pointing skywards. Close to these monuments to Russia’s past a small group of people is trying to create the human side of its future.

The Alexeyevskiy district consists of 300 blocks of flats and is home to 80,000 people. It was built for those who worked on the Metro and among them are now an estimated 35,000 pensioners. Here, in a damp basement office that used to house communist party meetings, the Alexeyevskiy Fund, with some assistance from the BEARR Trust, is developing services for them. Its director is Tatiana Yurievna Pavlicheva, who used to work as a metallurgist in the defence industry until, in 1990, she became involved in distributing humanitarian aid. “It was a big problem about how to give aid to people who needed it and stop well off people from grabbing it. Doing this work made me realise what problems existed and I started trying to see what I could do. God wouldn’t forgive me if I didn’t do something.”

Her first step is to carry out a survey of the pensioners in the area and she expects to find about 1,000 who need help to cope alone. Like any western charity, the Alexeyevskiy Fund has to raise its own money. Tatiana appears to have found a uniquely Russian way of doing that, using the value of the newly privatised flats which these older people now occupy.

She explained: “An old woman lives alone and needs help. And there is a businessman who would like to have the flat when she dies. So the Fund sits in the middle. We contact the businessman, telling him that there is a flat of such a size in such a district and it is owned by a woman born in such a year but no other details. If he agrees, we get a lawyer to draw up documents so he pays money to our Fund and he will receive the flat in the end when she dies. The Fund then provides her with the services she needs for the rest of her life.”

Tatiana admits that with high inflation and investors wanting a quick return on their money, it is hard to persuade Russia’s new entrepreneurs to support the Fund now, in exchange for a possible return in several years’ time. But already one local businessman is paying some salaries in exchange for the promise of a flat when its octogenarian owners die. With salaries of 15,000 roubles (£8.50) a month and some flats worth $50,000 (£33,500) it could end up a very good deal. Already documents are being drawn up to allow the Fund to share in the profit to pay for some of its future projects.

It is a practical answer to the terrible problems which their older people face. They live in the biggest country on the planet, packed with natural resources. They have some of the best science and technology in the world and an enviable heritage of literature and art. They could have so much. But many have so little.

Translation: Lyudmila Alekseevna Cromova

Pictures: Grigory Dukor and Paul Lewis

Vs. 1.00 

20 April 2022

Monday, 11 April 2022


UPDATED for the 2022/23 tax year. All rates are those paid from 11 April 2022.

More than a million people who reach state pension age in the years from 6 April 2016 will not get the full amount of the new ‘flat-rate’ state pension - currently £185.15 from 11 April 2022.

But many of them could boost their pension towards or up to the full flat rate amount.

This guide is for men born 6 April 1952 or later and women born 6 July 1953 or later who paid into a good pension at work or, in some cases, into a personal pension.

It is complicated - don't blame me I didn't invent the rules! But please persist, as it could make you better off for the whole of your retirement.  

There are other groups who may not get the full new state pension because they have paid less than 35 years of National Insurance contributions. They may be able to boost their state pension by paying extra contributions now. This piece does not cover that issue. Try the links at the end.

The new state pension was supposed to be simple. A flat-rate amount for everyone who had at least 35 years of National Insurance contributions. This year 2022/23 that amount is £185.15 week (£9627.80 a year) and is taxable. However, there are around one and a half million people who will reach pension age in the years before 2027 who will get less than that even if they have 35 years or more National Insurance contributions.

That is because an amount is deducted from the new state pension for every year they paid into a good pension at work. I call it a contracted out deduction because they were ‘contracted out’ of part of the state pension called SERPS or State Second Pension (S2P). They paid lower National Insurance contributions and instead of that additional state pension they get a pension from their job which was supposed to replace it. The Government prefers to call it 'Contracted Out Pension Equivalent' or COPE. It is that COPE amount that is deducted from your new state pension.

This group includes most people who worked in the public sector, such as

  • nurses, doctors, and others in the NHS
  • teachers in schools and universities
  • police officers and fire brigade staff
  • civil servants
  • local government workers
  • armed forces
  • Post Office workers
It also includes many people who worked for one of the privatised industries such as British Airways, British Rail, British Steel, and Royal Mail.

Another large group affected are people who worked for a private sector employer who paid into a good scheme at work that promised them a pension related to their salary. They used to be called ‘final salary’ schemes and nowadays are called Defined Benefit or DB schemes. In the past many large firms ran such schemes. There are still more than 5000 of them and if you paid into one at any time from 1978 your new state pension will be reduced.

Also included are some people who paid into a personal pension and who were persuaded to contract out of part of the state scheme – at the time it was normally called ‘contracting out of SERPS’.

For all these people their new state pension will be reduced for the years they paid into a contracted out pension scheme. That deduction applies even if they have paid the 35 years which is needed to get a full pension – the deduction is made after the full pension is worked out. It can also apply even if they were contracted out for a short period and paid in 35 years or more when they were not contracted out. These deductions can be very large but normally can never leave you with less than £141.85 a week of the old or 'basic' state pension.

Please do not ask me why that is fair! It may not be fair, but it is the law. The good news is that you can reduce that deduction and, depending on your age and the amount deducted, you may be able to boost your pension up to the full flat-rate £185.15.

If your new state pension has an amount deducted from it because you spent some time paying into a good pension scheme at work then you can reduce that deduction or even wipe it out. It will help even if you already have 35 years of National Insurance contributions or more.

If your new state pension is reduced because you paid into a good pension scheme at work then every year of National Insurance contributions you pay from 2016/17 to the year before the tax year in which you reach state pension age will mean that deduction is less.

If you work and earn more than £123 a week you will get contributions credited or paid to your account (you start actually paying for them when you earn above £190 a week and that rises to £242 from 6 July 2022; under that they are credited). If you get child benefit for a child who is less than 12 then you will also get a credit for each week. If you get jobseeker’s allowance, employment and support allowance, or working tax credit then you will get a credit for each week you get that benefit. You can also get credits if you are a carer in some circumstances. Check here for more details of who can get credits. Some are given automatically, others have to be claimed.

Men can get credits for years between women’s state pension age and 65. They get a credit for the tax year in which they reach women's state pension age (unless they also reach 65 in that tax year) and any subsequent tax year before the tax year they reach 65. So these man credits are only available to men born before 6 October 1953. See footnote.

If you are self-employed then in 2022/23 you must pay what are called Class 2 National Insurance contributions if your profits are £11,908 or more. They are called Class 2 and are £3.15 a week (£163.80 a year). If your profits are between £6725 and £11,907 you will be given a credit. If your profits are up to £6724 you can pay these contributions voluntarily - but only for years in which the were genuinely self-employed. In previous years there were no credits paid and the threshold for paying was just below £6725 a year. 

If you will not pay National Insurance contributions at work or as self-employed or get credits for them then you can pay voluntary contributions, called ‘Class 3’. They will cost you £15.85 a week (£824.20 for a year). For each extra year of contributions your pension will be boosted by £5.29 a week (£275.08 a year) so the payback is rapid – three years for non-taxpayers; less than four if you pay basic rate tax; five for higher rate taxpayers, and less than six for top rate 45% taxpayers. Contributions for earlier years are less: 2021/22 - £800.80; 2020/21 - £795.60; making them even better value for money. If you pay in this year 2022/23 you can only pay the lower rates for two previous tax years. Contributions for 2019/20 and earlier will be at today's rate of £824.20. [For reference earlier rates were 2019/20 - £780.00; 2018/19 - £772, 2017/18 - £740, and 2016/17 - £733.20 but you can no longer pay at these rates.]

The new state pension was increased to £185.15 a week from 11 April 2022. It would have been higher - £194.50 a week - if it had been raised as promised by the so-called ‘triple lock’. That increases the state pension by prices, earnings, or 2.5% whichever is the highest. But that was cancelled in April 2022 and it was increased instead by only 3.1%, the rate of inflation in September 2021. The Government says it will return to the triple lock for the April 2023 increase.  

If you have paid some contributions at work or as self-employed during the tax year but you are short of a full year you can pay individual weeks through Class 3 (or Class 2) to make your record up to a full year.

You can only pay Class 3 contributions for the years before the tax year in which you reach state pension age. That limits the number of years you can pay to boost your pension. The table show which years you can pay Class 3 contributions to set against the contracted out deduction and the maximum boost that should give to your pension. Your pension cannot be boosted to more than £185.15 a week and it will not ever be reduced to less than £141.85 so the maximum boost is £43.30.

Reach State Pension Age in
Men born
Women born
Years you can pay
Maximum pension boost (2022/23 rates)
6 April 1951
5 April 1952
6 April 1953
5 July 1953
6 April 1952
5 April 1953
6 July 1953
5 Oct 1953
6 April 1953
5 Jan 1954
6 Oct 1953
5 Jan 1954

Men and women born

from 6 January 1954
to 5 July 1954
from 6 July 1954
to 5 April 1955
from 6 April 1955
to 5 April 1956
from 6 April 1956
to 5 April 1957
from 6 April 1957
to 5 April 1958
from 6 April 1958
to 5 April 1959
and later
from 6 April 1959
to 5 April 1960
and later

You can pay voluntary Class 3 contributions in the tax year they are due or up to six years after that. So you can still pay for the 2016/17 tax year until the end of this tax year, 2022/23. So you should act quite soon if you want to do that. You cannot pay them in advance. However, the price may rise as time passes so it will be cheaper to pay them as soon as you can.

If you will reach state pension age in 2022/23 you may want to act soon to see if you can boost your pension by paying National Insurance contributions for the six years 2016/17, 2017/18, 2018/19, 2019/20, 2020/21, 2021/22. That could give you an extra £31.74 a week on your pension.

You can phone the DWP’s Future Pension Centre on 0800 731 0175 and ask for help or advice about paying extra contributions. Have your National Insurance number with you. Ask what your ‘starting amount’ is and ask if there is a deduction for being contracted out. If your starting amount is less than £185.15 and there is a contracted out deduction then you may be able to boost it using the information in this guide. 'Starting amount' is explained in the notes below. If you have a deduction for a pension which you cannot trace use the Government's free Pension Tracing Service.

In the past, many people have contacted the DWP and been told they cannot boost their pension because they already have 35 years or more of contributions. That is incorrect. Some officials seem to be confusing this scheme with one to fill gaps in your contribution record. Others have been told that they need more than 35 years to get a full pension. That can be true in the circumstances in this blogpost, but it is a confusing way to put it. 

You may get more sense from the free and excellent Pensions AdvisoryService (now called Money Helper) or call on 0800 011 3797. Beware of similar sounding commercial organisations.

You can check your starting amount at this Government website. You will have to go through security procedures which can be a pain. Make sure it includes your 2015/16 contributions. This website may let you see how you can boost your pension by paying extra National Insurance contributions. It may be operational now or that may still be pending. 

1. All the rates in this guide are correct in 2022/23. 

2. If your income is low then you may get extra money from pension credit or help with your council tax or rent (rent or rates in Northern Ireland). If you buy Class 3 contributions to boost your pension those benefits will be reduced but it will almost always still be worthwhile.

3. Your ‘starting amount’ is the calculation of how much state pension you have built up at 6 April 2016 under the old and the new rules. Your starting amount is the one that is bigger. It will take account of National Insurance contributions paid up to 2015/16 and will also make a deduction for years you have been ‘contracted out’ of part of the state pension system called SERPS. If it shows you have fewer than 35 years of National Insurance contributions then you may be able to pay more to boost that number towards 35. See ‘other groups’ guides link below.

4. SERPS, the State Earnings Related Pension Scheme, was an earnings-related supplement to the basic state pension. People paid into it as part of their National Insurance contributions from April 1978 to April 2016. From April 2002 it was changed and renamed State Second Pension (S2P). It was SERPS and S2P – officially called ‘additional pension’ – which people ‘contracted out’ of if they paid into a good pension at work or in some cases into a personal pension which they chose to ‘contract out’. They paid lower National Insurance contributions. The pension they paid into was supposed to replace the SERPS or S2P but it does not always do so in full.

5. Tax years run from 6 April one year to 5 April the next. So 2022/23 runs from 6 April 2022 to 5 April 2023.

6. If you have an old company or personal pension you cannot trace, use the Government's free Pension Tracing Service.

7. Contacted Out Pension Equivalent is the amount deducted from your new state pension to take account of the time you were contracted out of SERPS/S2P. In theory the amount deducted should be paid to you by the pension scheme you paid into as part of being contracted out. But that will not always happen especially if you were contracted out into a personal pension. This government guide to contracting out sort of explains it.

8. Man credits. These man credits - called auto-credits - are only awarded for whole tax years, not individual weeks. Men born 6 April 1952 to 5 April 1953 can get a year of contributions credited for 2016/17. They may also get earlier years credit but they do not help with reducing their contracted out deduction. Men born 6 April 1953 to 5 October 1953 can get a year credited for 2017/18.

Men born 6 October 1953 or later cannot get them.

Men born 6 April 1951 or later and women born 6 April 1953 or later.
·         Filling gaps in your National Insurance record – new state pension 

Men born before 6 April 1951 and women born before 6 April 1953
·        Filling gaps in your National Insurance record – old state pension 
There is also a comprehensive guide to what you can do to top up your state pension available as a download from the mutual insurance company Royal London written by former Pensions Minister Steve Webb. It is well worth a couple of hours study.

Version: 5.10
4 May 2022
Previously: Target 155, Target 164, Target 169, Target 175, Target 179