The state pension is a benefit payment available to the majority of people when they reach the current State Pension age. It is a universal, non-means tested benefit available to all, so long as they have made the requisite National Insurance contributions or credits.
What is the State Pension Age?
The State Pension age is the age at which you become eligible to claim the State Pension. At present it is 65 for men and 60 for women, although it is gradually increasing to 65 for women.
You can use the government’s own online calculator to work out what your State Pension age will be, as it it will depend when you were born.
How do I qualify?
Throughout your working life you will build up a record of your NI contributions based on the amount of income you have earnt. The amount of pension income you receive when you reach the state pension age will depend upon how many years you have been making NI contributions.
In order to get the full amount you need to have been working and making NI contributions for a minimum of 35 years under the new State Pension rules (see below). For those who have not been in employment and making NI contributions (such as registered carers, the unemployed, and stay at home parents) there is the option to receive National Insurance Credits.
What is the new State Pension?
A new State Pension was introduced on 6th April 2016 which applied to anyone who reached pension age on or after this date. The new arrangement applied to..
- Men who were born on 6th April 1951 or later
- Women who were born on 6th April 1953 or later
The new State Pension was introduced in order to provide a fairer and more simple system. The current amount paid is a flat rate of £164.35 per week for the year 2017/18. You may get more or less than this amount however, as the level of income available is based upon your NI contributions and credits. In order to receive the full amount you must have an NI record credited with 35 years of contributions or credits. Those who have between 10 and 34 years of contributions or credits will receive a graduated amount instead. Should you have been credited with 10 years or less you are not entitled to anything. That said, if you were making contributions prior to the April 2016 deadline there are transitional arrangements in place that factor in your NI contributions record before this date.
*There are some exceptions to the above including if you paid married women’s or widows reduced National Insurance OR if your spouse or partner has passed away
What is the old State Pension?
The old state pension was the system that was in place prior to April 2016 and applies to those who reached state pension age before this date. In order to receive this income you must have been making National Insurance contributions/credits, with the maximum amount of £122.30 per week being available to those with 30 years contributions/credits. This amount increases under what has been dubbed the ‘triple lock’ which means the payment will increase by one of three means (whichever is the highest in that particular year)
- Average Earnings growth as a percentage
- Prices – based on the CPI inflation index
- A mandatory level of 2.5%
If you are married or in a Civil Partnership
If you are married or in a civil partnership you may be able to use your partner’s NI contributions in order to receive the State Pension (or top it up if you are not receiving the full amount). A person may also claim on this basis if the civil partnership or marriage ended due to divorce, death of the other person, dissolution or annulment.
How to make a claim
Your pension will not be paid automatically when you retire, you need to make a claim in order to receive the money. In the months prior to you reaching state pension age, you will get a letter from the Government Pension Service outlining what do you need to do to start receiving your pension.
There are three ways to claim your pension…
- Submit an application online using the gov.uk website
- Download a pension claims form and applying by post
- Call the Pension Service on 0800 731 7898
Help with making a claim
If you need help the quickest way is to call the DWP helpline on 0345 604 3349, with calls answered 8am to 6pm, Monday to Friday.
This service is also available In Welsh by calling 0345 604 3412. You can also contact them via Textphone on 0345 604 0523 or if you prefer, you can email them on email@example.com.
How much will I get?
Those who qualify under the new system from April 2016 onwards will have to be credited with a minimum of 10 years of NI contributions, either through paid employment, from raising a family, by caring for a sick or disabled person or being enrolled in approved training schemes. Once you reach the minimum amount of years you will receive 10/35ths of the full rate which is currently £164.35. Each additional year (s) of NI contributions/credits will increase your starting amount by a commensurate amount based of the above calculation. Those who are credited with 35 years or more will receive the highest available amount.
How to boost the amount you get
There are a number of ways to boost the amount of income you receive from your state pension, which is particularly important if you do not have enough NI credits to receive the full basic rate.
Additional State Pension
Many people under the old system had been building up what was know as the additional state pension which was a top up to the basic state pension amount. Although this scheme was abandoned under the new rules from April 2016 onwards, those who had been paying into the system prior to this date may be allowed to carry this over into the new system. It’s quite a complex calculation which essentially compares what you would have earned under the old and new system and then awards you whichever is the highest amount, known as your ‘starting sum’ calculation.
Delaying (also known as deferring) your state pension will mean that you will receive a higher amount once you start receiving payments. This is especially favourable for those who are still in work. It is also worth noting that you can in fact delay payments once you have started claiming, although you can only exercise this option once.
In order to work out how much extra money you will get from deferring payments, you will first need to decide when it is you wish to retire. Assuming this is after the state pension age, you can then increase your pension income amount by 1% for every 9 weeks you delay payments. So, if you defer payments for a whole year, you will receive an extra 5.8% in income, which will be paid at the same time as your state pension payment. For example, if you were to defer the full basic rate of £164.35 for 12 moths, you will be due an additional £468 a year.
Buying “Additional” Years
If for any reason you have missed making contributions it is possible to buy additional NI years upto the value of £741 for each missed year. The system works by paying a one off lump sum which then equates into a higher state pension once you retire. The amount you will benefit from this will depend upon how long you live for, but the value could be worth thousands over the lifetime of your retirement.
HMRC will send you a letter if you have NI gaps but you can also contact them on 0845 3000 168 yourself and get an online statement that will reveal any gaps.
Apply for a pension credit
Before you make a payment for additional years it is worth checking if you are eligible for a Pension Credit. These are designed for lower earners who do not have enough credits for the full £164.35 weekly pension income. This process is means tested so any existing savings will have to be declared and then assessed. If however you do find you meet the criteria, the pension credit will top up your weekly income to meet the basic flat rate.
See our full guide to Pension Credit for more information
How and when is the money paid?
Once you have made a claim your first payment will be made directly into your bank account on the first payday after you reach State Pension Age (SPA). You can have your pension paid into a bank account, building society account, Post Office account or credit union.
If you choose, you can nominate someone to withdraw your pension on your behalf, but this arrangement has to be agreed with your chosen account provider.
Women and the State Pension
Below is a summary of specific issues that impact upon women’s state pension entitlement…
Increase in SPA for women
There is a proposed increase in the state pension age for women, currently 63 years and 9 months, but increasing to 65 years by 2018, then again to 66 years by 2020 and then again to 67 years by 2028. The increase to 65 years was originally meant to be introduced in 2020 (via the Pension Act of 1995) but was amended by the 2010 coalition government so that it was brought in by 2018. This changed affected 2.6 million women who had to rethink their retirement plans. For example, 300,000 women who were born between December 1953 and October 1954 were unexpectedly made an extra 18 months to get their state pension.
NI Gaps / Single Tier Pension
A great number of women have gaps in the NI contributions, often due to them taking a career breaks to look after family and dependents. It is vital that before you reach state pension age you request a pension statement to see what you are entitled to.
Making voluntary NI contributions
If you do have gaps in your NI record you can make voluntary contributions when you are not in work. In addition, if you have any gaps over the previous six years, HMRC permits you to make up this difference. You may in fact be able to cover gaps longer spanning more than six years but this depends on your age.
Death benefits for state pensions vary depending on when you reach State Pension Age (SPA)
If you reached SPA before 6th April 2016
Your spouse or partner maybe entitled to claim some of your state pension once you pass away but this is dependent on them not having built up their own full entitlement. If you were to die before you reach state pension age and your partner/spouse were to get remarried or enter a civil partnership with someone else (before they reach retirement age), then they would lose this entitlement.
You may also be able to inherit your partner/spouse’s Additional State Pension if were they paying into one. To find out how much can be inherited, visit the Additional State Pension page on the gov.co.uk
If you reached SPA after 6th April 2016
Under the new pension system the amount a widow can inherit from their late partner/spouse’s pension depends upon when they and their partner/spouse reached (or will reach) the state pension age. You will need to contact the Pension Service in order to calculate the amount you are entitled to. However, there are transitional arrangements in place to protect people who have made NI contributions after the April 2016 start date of the new system.
Bereavement Support Payment
This is a payment given to those whose partner/spouse has passed away after 6th April 2017. It is a non-means tested payment which is paid in one initial lump sum followed by 18 monthly payments. See full section on Bereavement Support Payment.
Getting a forecast or statement
You can use HMRC state pension forecast tool, which will allow to obtain a forecast of your state pension. However, in order to use the tool, you must register for a government gateway account. Alternatively you can complete a BR19 form to get a statement, either online or by post.
State Pension Calculator
If you want a quick calculation on when you will reach retirement age, the consumer site Which? has a simple to use online pension calculator.
Problems, Complaints & Appeals
If you encounter any problems or wish to make a complaint you can call the Department for Work and Pensions on 0345 606 0265 or alternatively you can contact your local pension centre
Pensions Service (DWP)
0800 731 7898
Pensions Advisory Service
0300 123 1047
020 7630 2200
Pension Tracing Service
0345 6002 537
Pensions Protection Fund
0330 123 2222
0345 600 1011
0800 678 1174
Citizens Advice Bureau
03454 04 05 06
Below is a list of the most frequently asked questions with regard to claiming the State Pension.