STATE OF PAY
Little-known state pension rules you need to know including age you will get cash
Plus, we've explained what happens to yours when you die
THE state pension, worth £221.20 a week, is paid to most Brits once they retire.
However, not everyone gets the same state pension, and what you are awarded depends on your National Insurance record.
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The full rate of the new state pension is £221.20 a week - or £11,502.40 a year.
Under the old system, the full basic state pension is £169.50 per week and is paid to those who retired before April 6, 2016.
You might be curious about the eligibility criteria for securing the full payment or unaware of the strategies to maximise your state pension benefits.
Additionally, questions often arise about what happens to your state pension entitlements after you pass away.
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We've broken down everything you need to know about your retirement income, ensuring you’re well-informed and prepared for the future.
QUALIFYING AGE
At the moment, the current state pension is paid to both men and women aged 66.
The state pension age has been rising as Brits get older.
It's expected to hit 67 by 2028 and 68 by 2046.
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That means everyone will have to work longer under the plans, but those born after April 1971 were already approaching the state pension age of 68.
Exactly how you're affected will depend on when you were born.
It’s important to note that you can retire at any time, but you need to have a personal pension or retirement plan in place.
You can also defer your state pension and don't have to claim it as soon as you turn 66.
At the moment for every nine weeks you delay taking the state pension, the payout rises by 1%.
This means that you boost your state pension by around 5.8% every year you defer.
This is an extra £12.82 per week or £666 a year.
Could you be eligible for Pension Credit?
HOW MUCH YOU'LL GET
The full rate of the new state pension is £221.20 a week - or £11,502.40 a year.
This is what the state pays those who reach state pension age after April 6, 2016.
Under the old system, the full basic state pension is £169.50 per week or £8,814 a year, and it is paid to those who retired before April 6, 2016.
Under the triple lock, the state pension is uprated each April by inflation for the previous September, wages or 2.5%, whichever is higher.
Current forecasts suggest that state pension payments could rise by up to £517 a year from April 2025.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
YEARS TO QUALIFY
To receive the full new state pension, you need 35 qualifying years of National Insurance contributions or credits.
You need 30 qualifying years to qualify for the basic state pension (for those who reached the state pension age before April 6, 2016).
If you have gaps in your National Insurance record due to periods of unemployment, living abroad, or not paying NICs for other reasons, these can affect your entitlement.
CHECK FOR MISSING YEARS
IF you think you're missing National Insurance years, the first thing to do is check your State Pension forecast.
You can check this as well as the State Pension age through the government's new 'Check your State Pension' tool online at www.gov.uk/check-state-pension.
The tool is also available through the HMRC app, which you can download free on the Apple App Store and Google Play Store.
You'll need to log in using your Personal Tax Account login details. If you don't already have an online HMRC account, you can register at gov.uk.
It shows you how much your state pension could increase by and what NI years you'll need to buy to achieve this.
YOUR EARNINGS MATTER
If you're not earning above the thresholds at which you start paying National Insurance, you could have gaps in your record that make you ineligible for the total amounts.
If you work and earn above the Primary Threshold - currently £242 a week - you automatically start paying National Insurance and build qualifying years towards your state pension.
But, if you earn above the Lower Earnings Limit (LEL) - currently £123 per week - you would not pay NI and therefore wouldn't get a credit.
If you earned under the limit for an extended period of time then you may have holes in your record from that time.
Working part of a year on the LEL level but working the rest on a higher wage could cause problems too.
Just because you paid some NI in a given year, doesn't mean you paid enough NI to get a "qualifying year’" towards your state pension.
If you earned at the LEL through the year then you would get a qualifying year towards the state pension.
But if you only worked part year, then it’s more complicated.
The issue of having a "part year" could arise if you had a gap between ending one job and starting another, or if you took six months in a to go travelling and didn’t pay NI.
YOU CAN GET FREE NATIONAL INSURANCE YEARS
There are several reasons why someone may have gaps in their national insurance record.
One of them is if they took time out of the workforce to look after children.
And if you didn't claim child benefit during that time, you'll likely have some gaps.
This is because you're rewarded with National Insurance credits when claiming child benefit.
So, if you opted out of receiving child benefits, then you could have gaps.
However, paying to plug these holes in your record may not be necessary in this case.
Before paying for voluntary National Insurance credits, it's worth seeing if you can backdate a claim to receive the credits for free through these benefits.
Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.
Those on certain benefits, including Universal Credit, can qualify for Class 1 credits, too.
You can check the full list of people eligible to claim credits by visiting www.gov.uk/national-insurance-credits/eligibility.
It explains the circumstances where you'll need to claim and when you'll get it automatically.
CLAIMING THE STATE PENSION
YOU won't automatically get the state pension - you need to claim it once you're eligible.
You should receive a letter explaining what to do no later than two months before you reach state pension age.
You can apply for the State Pension online by visiting www.gov.uk/get-state-pension.
You can choose to defer getting the state pension - you don't have to take it as soon as you are eligible when you reach state pension age.
Leaving your state pension untouched can boost the amount you eventually get.
If you opt to defer your state pension, your entitlement increases by the equivalent of 1% for every five weeks you do so.
As the state system can be tricky to navigate, requesting a state pension forecast is a key part of pension planning.
This will help you understand how much you could be eligible to receive and at what age.
View your State Pension forecast by visiting www.gov.uk/check-state-pension.
YOU CAN PAY TO TOP UP YOUR PENSION
If you aren't eligible for the full state pension, buying back missing years can be really valuable.
But earning back the years isn't free, so your voluntary contributions come at a price.
If you fill gaps between 2006/07 and 2015/16, you'll pay the 2022/23 rates for contributions.
It is worth £15.85 a week, which means it costs £824.20 to buy one year of contributions.
As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year.
Although you'd have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
Someone who was retired for 20 years would get back around £55,000 in total (before tax).
Anyone under 73 can make voluntary pension contributions, as it's assumed everyone under this age will claim the new state pension.
If you're below the state pension age, you can check your state pension forecast by visiting www.gov.uk/check-state-pension to determine if you'll benefit from paying voluntary contributions.
You can also contact the Future Pension Centre by calling 0800 731 0175.
If you've reached state pension age, contact the Pension Service to find out if you'll benefit from voluntary contributions.
You can contact this service in several different ways by visiting www.gov.uk/contact-pension-service.
You can usually pay voluntary contributions for the past six years.
TOP UP YOUR PENSION ON A LOW INCOME
PENSION credit is a tax-free benefit for hard-up households and designed to top up your income to a minimum limit.
There are two parts to the benefit, and pensioners can be eligible for one or both parts - here are the current rates for the tax year:
- Guarantee credit - tops up your weekly income to a guaranteed minimum level. This is £218.15 a week if you're single and £332.95 a week for married couples.
- Savings credit - provides extra money if you've saved money towards retirement. You can get an extra 17.01 a week for a single person or £19.04 a week for a married couple.
You can also get additional pension credit if you have a disability or caring responsibilities or have to pay certain housing costs such as mortgage interest payments.
For example, you can get either £66.29 a week or £76.79 a week for each child you're responsible for.
Applications for pension credit can be made on the government website or by ringing the pension credit claim line on 0800 99 1234.
STATE PENSION AT DEATH
You might think that if you’ve written a will, then all your money will automatically go to your chosen loved ones when you die.
However, the rules around state pensions and inheritance are highly complicated.
You may be able to get extra pension payments from your husband, wife or civil partner's pension or National Insurance contributions upon their death.
However, what can be passed on depends on whether the deceased or the spouse is under the old state pension or the new one, as well as when they died.
If you reached the state pension age before April 6, 2016, you should be able to get any state pension based on your husband, wife or civil partner’s National Insurance contribution when you claim your own pension.
You will not get it if you remarry or form a new civil partnership before you reach state pension age.
If you reached state pension age on or after April 6, 2016, you'll receive the "new State Pension", and you may be able to inherit an extra payment on top of your pension if your spouse or civil partner dies.
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You can contact the to check what you can claim.
Find out more by visiting www.gov.uk/contact-pension-service.
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