Articles

State pensions

6min

With all the changes made to the state pension over the years, many people are left wondering what this means for them. Learn more about the payments on offer and how you can qualify

The state pension is a valuable source of funding and can form an important part of your retirement plans

What is a state pension?

The UK state pension is intended to give you some extra financial support during your retirement. It’s a weekly payment made by the government to top up the retirement income you’ve built in a workplace or private pension scheme.

You can only start claiming this helpful benefit once you reach your official state pension age.

Your state pension entitlement is generally decided by the number of years you’ve been making National Insurance contributions. Following changes introduced by the government in 2016, you now need ten ‘qualifying years’ on your National Insurance record to receive any money from the state pension. You’ll need 35 qualifying years to be given the full state pension during your retirement.

Read on to explore the ins and outs of the UK state pension system, including how much you can expect to receive, the ways the state pension age is changing – and why this benefit shouldn’t be your only source of retirement funding.

What is the state pension age?

The state pension age is due to gradually increase to 67 by 2028, before hitting 68 between the years 2037 and 2039. The government offers a handy tool to make checking your state pension age easier.

As life expectancy rates go up and people choose to work for longer, the state pension age is under constant review by the government. The men’s and women’s state pension age used to be different. But after a series of reforms since 2010, they’re both currently set at 66.

Our research* tells us only 28% of non-retired adults know what age they'll start receiving their UK state pension. The state pension age is often used as a starting point for people in the UK to work out their target retirement age more broadly. It’s simply the earliest date when you can start receiving payments from the state pension.

If you’re passionate about your career or simply unsure of when you’ll be financially strong enough to retire, it’s important to note that you can always work beyond the state pension age. There’s no longer a default retirement age in the UK, meaning you can generally carry on working for as long as you wish.

But the state pension age is still a key factor to consider when putting together a pension forecast and thinking about a target retirement date.

How you can qualify for the UK state pension

Following a shake-up of the system in April 2016, you’re now likely to receive something called the ‘new state pension’ once you reach your state pension age. It applies to men born on or after April 6th, 1951, and women born on or after April 6th, 1953.

The new state pension is designed to create a more straightforward system, making it easier to forecast the amount of money you’re likely to receive from the government during your retirement.

Under this new system, the amount you receive is generally based on your National Insurance record and the number of qualifying years you manage to build up over your working life. You’ll need 35 qualifying years to get the full state pension once you retire and ten to receive anything.

You can build up a qualifying year towards your state pension by:

  • Earning more than £190 a week from one employer and paying National Insurance contributions on that money.
  • Earning £123 to £190 each week from one employer – and then being treated as paying National Insurance contributions.
  • Paying Class 2 National Insurance contributions of £3.15 a week if you’re self-employed.
  • Making voluntary National Insurance contributions of £15.85 a week.
  • Successfully applying for National Insurance credits, for example if you have caring duties or claim certain benefits.

What is the basic state pension?

The ‘basic state pension’ is the name given to the previous system that was in place before the April 2016 reforms.

Only men born before April 6th, 1951, and women born before April 6th, 1953 can now claim the basic state pension. You’ll receive the new state pension if you were born after these dates.

The government decided to replace the basic state pension because it was complicated and made it tricky for people to forecast the kinds of payments they might receive during their retirement. As with the new state pension, the amount retirees are paid is based on the National Insurance contributions they’ve built up over their career.

Under this system, some people are also eligible to receive another benefit called the ‘additional state pension’. This tops up their basic state pension and is based on factors such as their earnings and how many years they’ve paid National Insurance contributions for.

What is the state pension amount?

The exact weekly payment made by the UK state pension will differ from person to person. That’s because it depends on the number of qualifying years of National Insurance contributions you have. 

So, what is the maximum state pension you can receive? Under the new state pension, the most you can get each week is £185.15 in the 2022/23 tax year. You’ll need 35 qualifying years to be handed this amount. If you only have between 10 and 35 qualifying years when you retire, a proportion of the maximum weekly figure will be paid instead.

The maximum weekly payment is £141.85 for people who are still covered by the basic state pension.

How can I start checking my state pension?

As we’ve highlighted, a range of factors will influence the state pension payments you receive in retirement. They can include the year you were born, the number of qualifying years of National Insurance contributions you have under your belt, and whether you’re eligible for the new or basic state pension.

The government offers a UK state pension calculator to give you a rough forecast of what you can expect to receive. Our pension income calculator can also show you what your broader retirement finances might look like, based on your current contributions into a workplace or private scheme.

But don’t forget that estimates are never set in stone when it comes to the state pension. Things may change between now and your retirement – especially if further reforms are made to the pension age or the weekly payment.

Preparing your pension at any age

Whether you’re on the first rung of the career ladder or fast approaching retirement, the state pension isn’t something you can simply push to one side and worry about later.

With so many changes made to the state pension age and the structure of the system in recent years, it’s never been more important to keep an eye on how your retirement plans might be affected

Carrying out a regular state pension forecast, tracking your National Insurance contributions, and understanding the differences between the new and basic state pension could prove essential to your future. Don’t leave it any longer – start mapping out your retirement finances today.

Discover how our retirement advice service can help you make the most of your savings

 

State pension FAQs

What is the state pension for a married couple?

As a result of the 2016 reforms, married couples no longer get any special treatment under the new state pension system. This means the maximum state pension for a married couple is £370.30, which is simply double the full weekly amount of £185.15 an individual can receive. The total will be lower if one or both partners have fewer than the 35 qualifying years of National Insurance contributions needed to receive the full state pension.

What happens to my state pension when I die?

Your husband, wife or civil partner may be able to claim some of your state pension payments after you die. For example, they might be eligible to inherit an extra payment on top of their own state pension entitlements. The Pension Service should be their first port of call to find out exactly what they can claim.

What counts as a full year for NI contributions?

You’ll automatically build up a full qualifying year towards your state pension if you earn more than £190 a week from one employer and pay National Insurance contributions on that money. If you’re self-employed, you can achieve a full qualifying year by paying £3.15 a week in Class 2 NI contributions.

Will the state pension be enough to live on in retirement?

The UK state pension is only really designed to top up your personal retirement savings and may not cover all your household expenses on its own. As a result, it’s important to build up other savings over the course of your working life, for example in a workplace or private pension scheme.

Data sources

*LV= Wealth and Wellbeing Research Programme - LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in September 2022