How do I work out my 'yearly average'?


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A 'yearly average' is the average number of reckonable contributions paid or credited from when you first started paying social insurance to the end of the tax year before you reach age 65.

To calculate your 'yearly average':

  • count the number of tax years beginning with the year you first started paying social insurance up to and including the tax year before you reach age 65,
  • count up all the reckonable contributions paid and credited over these years, and
  • divide the number of reckonable contributions and credits (2) by the number of tax years (1).

Example:
A person started paying social insurance for the first time on 7 August 1963. They reach age 65 on 12 June 2008. The last tax year before they reach age 65 is 2007.

  1. Counting from the 1963 tax year up to and including the 2007 tax year gives a total of 45 tax years.
  2. They have a total of 1,260 reckonable contributions.
  3. Dividing 1,260 contributions by 45 years gives a yearly average of 28 contributions.

Based on this record they will qualify for 98% of the standard rate of State Pension (Transition).

Last modified:19/08/2011
 

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