State Pension

The State Pension is a regular payment from the Government. It is usually paid every 4 weeks from State Pension age until death.

To be eligible for the new State Pension you must have reached State Pension age post-April 2016, and have paid at least 10 years of National Insurance (NI) contributions. To receive the full new State Pension you must have paid 35 years of NI contributions.

If you have never worked, and therefore never paid NI, you may still be eligible for the State Pension if you have received certain state benefits, for example carer’s allowance or Universal Credit.

For the current tax year 2023/24, those entitled to the maximum new State Pension will receive £203.85 per week.

This is based on 35 years of full National Insurance (NI) contributions and/or NI credits.

The State Pension increases each year by at least 2.5%. It could be more if the rate of inflation or the average earnings growth is more than 2.5%. If you retire abroad, this may not apply – check whether you’ll still receive increases each year.

The State Pension age is the earliest you can claim your State Pension. Your State Pension age depends on when you were born.

For people reaching State Pension age now, it will be age 66 for women and men. Only those born prior to 6th October 1954 will have been able to retire at age 65. The State Pension age is set to increase from age 66 to age 67 between April 2026 and April 2028.

You can check your State Pension age here: https://www.gov.uk/state-pension-age

If you don’t claim your State Pension in the year you reach State Pension Age, it will be increased when you do take it. For each year you delay, it increases by almost 5.8%.

The State Pension Age is increasing all the time as we have an increasing population and people are living longer. This means that it is becoming very costly for the Government to maintain State Pensions.

Now that people are living longer, the belief is that they should be able to work longer before receiving their State Pension.

If individuals wish to retire early, they will need to ensure that they have enough savings, personal or occupational pension provision to bridge the gap between their last salary payment and their first State Pension payment, which could be many years later.

To receive the full State Pension, you must have a National Insurance (NI) contributions record for 35 years.

If you have less than 10 years NI contributions, you won’t receive any State Pension.

If the number of years you have been contributing for is between 10 and 35 years then the amount you receive will be proportionate to the number of years you have been contributing.

You can pay more to make up for any shortfall in your NI contribution record.

If you're not already getting your State Pension or delayed (‘deferred’) claiming it, you can apply for a State Pension statement, which will tell you how much you are likely to get.

If you have gaps in your National Insurance (NI) contributions, for example because you were self-employed or working abroad, or were unemployed but not claiming benefits, then you can pay to make up any gaps.

You can get a summary of your NI history and any gaps you might have here: https://www.gov.uk/check-state-pension.

The state pension is not tax-free, but the money you receive is paid gross, without any tax being deducted. Any tax due will normally be collected from any personal or workplace pension. If you have no other pension or earned income you may have to complete a Self Assessment tax return each year. Alternatively, HMRC may send you a Simple Assessment.

For the current tax year, 2023/24, if your total annual income is over £12,570 then you will need to pay income tax on your State Pension. 

The State Earnings Related Pension Scheme (SERPS), originally known as the State Earnings Related Pension Supplement, was a UK Government pension arrangement, to which employees and employers contributed between 6 April 1978 and 5 April 2002, when it was replaced by the State Second Pension. The purpose of the scheme was to provide a pension in relation to your earnings, in addition to the basic State Pension.

Employees who paid full Class 1 National Insurance (NI) contribution between 1978 and 2002 earned a SERPS pension. Members of occupational pension schemes could be 'contracted out' of SERPS by their employer, in which case they and the employer would pay reduced NI contributions, and they would earn virtually no SERPS pension.

The principle was that everyone would receive a SERPS pension of 25% of their earnings above a 'lower earning limit' (approximating to the amount of the basic State Pension). The scheme was phased in over twenty years so that those retiring before 1998 received a SERPS pension proportional to the number of years that they had made contributions to it. There was an 'upper earning limit' of about seven times the lower earning limit, beyond which earnings were disregarded for NI contributions and calculation of SERPS pensions.

The State Second Pension (S2P), or Additional State Pension, was introduced in the UK by the Labour Government on 6 April 2002, to replace the SERPS (State Earnings-Related Pension Scheme). The Additional State Pension was replaced for new pensioners by the new State Pension on 6 April 2016.

The old State Pension, or Basic State Pension (pre 6 April 2016) is a regular payment from the Government paid to you based on your previous National Insurance (NI) contributions that people claim in later life. You can claim the old State Pension if you reached State Pension age and are:

• A woman born on or before 5 April 1953
• A man born on or before 5 April 1951

If you were born after the above dates and therefore reach State Pension age on or after 6 April 2016, the new State Pension rules will apply.

The New State Pension was introduced on 6 April 2016 for people reaching State Pension age on or after that date. The New State Pension is a regular payment from The Government that most people can claim in later life. You can claim the New State Pension at State Pension age if you have at least 10 years National Insurance (NI) contributions and are:

• A man born on or after 6 April 1951
• A woman born on or after 6 April 1953

If you were born before these dates, you remain on the old pre-2016 State Pension, otherwise known as the old State Pension or the Basic State Pension.