The State Pension
What you might get
A new State Pension system came into effect from 6 April 2016. This page provides you with information on how those reaching State Pension age (SPA) before 6 April 2016 and those reaching SPA on or after 6 April 2016 are affected.
With the new single tier State Pension having been introduced, what you might get depends on when you reached or will reach your State Pension age (SPA)
Reached your SPA before 6 April 2016
The previous rules apply to you if you have reached your SPA before 6 April 2016. You will not be affected by the new rules, even if you deferred taking your State Pension.
Basic State Pension (BSP)
The basic state pension (BSP) is set by the Government each year. The full BSP for 2017/18 is £125.95 a week. If you don't have enough National Insurance contributions credits to get the full BSP, you may be entitled to a lower amount based on the years of contributions or credits on your record.
You may be able to get a BSP or increase your BSP using your spouse or civil partner's national insurance contributions. This could be up to a maximum of £75.50 a week.
Additional State Pension (ASP)
The additional State Pension (known as the State second pension (S2P), formerly SERPS) is not a fixed amount. It depends on your earnings on which you paid national insurance contributions, and whether or not you were contracted out through your workplace or personal pension.
The additional State Pension is not available to you if you’re self-employed.
Graduated Retirement Benefit
What you get depends on what contributions you made between April 1961 and April 1975. For every £7.50 of graduated contributions you paid you get 13.43 pence in pension. Women who reached SPA before 6 April 2010 built up pension at a different rate - for every £9 of graduated contributions they paid they got 13.43 pence in pension.
Age 80s age addition
When you reach 80, your State Pension is automatically increased by 25 pence per week.
To get an estimate of your State Pension, please click here.
Reaching your SPA on or after 6 April 2016
The new State Pension was introduced for individuals reaching State Pension age on or after 6 April 2016. The full amount of the new State Pension is set above the basic level of means-tested support, currently £164.35 per week. If you entered the National Insurance (NI) system on or after 6 April 2016 you will be required to have 35 qualifying years of contracted-in NI contributions or credits to get the full amount. If you don’t have the full 35 years, you will get a pro-rata amount provided you meet the new 10 year minimum qualifying period.
There are transitional provisions for those who have built up qualifying years or credits prior to 6 April 2016, to ensure that you will not receive a lower pension amount than you would have received under the previous system rules, so long as you meet the new 10 year minimum qualifying period.
At 6 April 2016 your existing NI record is used to obtain a starting amount. Your starting amount takes into account periods of contracted out service. You will be able to increase your pension up to the amount of the new State Pension at the rate of 1/35th of the full rate (£4.68 to the nearest penny) for each additional qualifying year credited after 6 April 2016. This increase is made until you reach the full amount of the new State Pension or State Pension age, whichever comes first.
Those reaching their State Pension age after 6 April 2016 can be split into four groups:
- Individuals who have the necessary 35 qualifying years, who have not been contracted out, who have only accrued a small amount of additional State Pension - will have a starting amount which is equal to the new State Pension.
- Younger individuals, with fewer qualifying years, or older people who have spent many years contracted out of the additional State Pension - may have a starting amount which is less than the full level of the new State Pension. These people will be able to increase their new State Pension, at the rate of 1/35th of the full rate (£4.68 to the nearest penny) for each additional qualifying year until they reach SPA or the full amount, whichever comes first.
- Older individuals with many qualifying years, who have not contracted out and have accrued a good additional state pension may have a starting amount which is more than the full amount of the new State Pension. The amount over the new State Pension is known as the 'protected payment'. The Protected Payment will be increased before state pension age and in payment. They will not build up any further state pension from April 2016.
- Individuals whose National Insurance record is all accrued after 6 April 2016 will have their whole pension calculated on the new system.
Anyone can request a pension forecast under the new rules. The pension forecast will give individuals an estimate of how much they may get under the new State Pension based on their current National Insurance record. The forecast offers an estimated amount, not a guaranteed amount, as it is based on an individual’s current NI record and assumes future NI contributions.
To find out more about the new State Pension system, please click here.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.