The new State Pension
This new State Pension only applies to men born on or after 6 April 1951 and women born on or after 6 April 1953. It has been announced that the new State Pension will be £155.65* per week. To claim any new State Pension you will have had to have made National Insurance contributions (NICs) for at least 10 years.
*This is based on having at least 35 'qualifying years' of National Insurance contributions (NICs).
To see how much you’re currently due to get, use the Government’s State Pension Calculator
The State Pension is the main source of retirement income for a lot of people in the UK. It is a guaranteed income that’s paid by the Government. You’re eligible to get your State Pension once you reach State Pension age. If you don’t want to start taking it, then you can choose to defer receiving the payments to a later date (see below).
Who is eligible for the new State Pension?
You’re eligible for the new State Pension if you’ve paid, or been credited with, National Insurance contributions (NICs) which some may also know as their Stamp. In the past there have been different categories of NICs which is why the State Pension can be confusing.
If you are or were employed, your NICs are deducted from your salary. These are paid directly to the Government, along with your employer’s contributions. If you are or were self-employed it’s your responsibility to pay your NICs, which are classed differently.
In the past the rules were different for men and women. To find out more about how much you can expect to get from your State Pension, you can ask for a forecast by applying online at:
When will you get your State Pension?
State Pension age varies depending on when you were born but is expected to increase gradually to 68 by mid 2030s. To find out when you’ll be entitled to collect your State Pension, use the Government’s State Pension calculator.
You have to claim your State Pension
You don’t get your State Pension automatically, you need to claim it. You should get a letter four months before you reach State Pension age telling you what to do. So, if you’ve not been contacted about claiming it three months before, call the State Pension claim line on 0800 731 7898.
How much is the new State Pension?
At the moment, the full basic State Pension is £155.651 a week which is equivalent to £674.48* a month. To get this you’ll need to have 35 qualifying years of National Insurance contributions (NICs). If you’ve been employed most of your working life you should easily qualify. If not, you may have received National Insurance contribution credits or be able to make voluntary contributions to boost your State Pension income.
1 Tax year 2016/2017 based on one person with a full National Insurance contribution record
Inflation and the State Pension
The basic State Pension increases by at least 2.5% a year. But if prices (as measured by the Consumer Price Index (CPI)) or earnings (the average percentage growth in UK wages) go up more than this then your pension will go up in line with the highest. This is known as ‘The Triple Lock’.
Tax on State Pensions
HM Revenue and Customs (HMRC) see your State Pension as an income, although you do not pay tax on it directly. If your yearly income goes over your personal allowance (the amount of income you can receive in a tax year before you start paying income tax – the standard personal allowance is £11,000 in tax year 2016/17), the tax due will be taken from any additional income you receive and paid according to the tax bracket you fall into.
Deferring your State Pension
You’re eligible to collect your State Pension the week you reach State Pension age, but you don’t have to. You can defer the payment of your State Pension and choose one of these options. If you defer, your State Pension will increase by 1%2 for every nine weeks, that’s 5.8%2 over 12 months.
2 These figures do not take into account a rise or fall in inflation rates.
Here’s how it works
If you deferred a State Pension of £155.65 a week this is how much you would get.
|Years deferred:||Your £155.65 State Pension becomes:|
Alternatively if you delay taking your State Pension for a year or more, you can take the money you’ve built up through deferring, plus interest, as a lump sum.
No deferral limit
You can defer the payment of your State Pension for as long as you want, as currently there are no deferral time limits.
State benefits during retirement
As well as the State Pension you could qualify for other benefits. Some of them depend on your age, others on your income. Together they can go a long way towards meeting the cost of living.
- Free NHS prescriptions for over 60s
- Free NHS eye test for over 60s
- Winter fuel allowance, currently only for those born before 6 July 1952
Plus, if you already receive benefits such as Pension Credit, you could get more support towards your health costs.
If you’ve reached State Pension age and have a low income, you could claim Pension Credits to top-up your weekly income to £155.603 if you are single and £237.553 if you are a couple.
Claiming Pension Credit also opens up other State benefits:
For your health:
- free NHS dental treatment
- help towards the cost of glasses
- help with hospital travel costs
- a Cold Weather Payment of £25 when the temperature is 0°C or below for seven days in a row
For your home:
- lower or no Council Tax if you live alone
- your rent paid in full by Housing Benefit
- help with mortgage interest, ground rent and service charges
If you’re a carer:
- a Carer Premium worth up to £34.604 a week
Any one of these could really help with your living costs, so they’re worth looking into.
3 Figures taken from GOV.UK
4 Figure taken from GOV.UK
Means tested benefits
Taking a lump sum from your pension pot can affect any means-tested benefits you may be receiving, they could stop or reduce.
Make sure you check to see if taking your pension alters your benefit situation. Visit Pension Wise for more information.