Will you get the full state pension? Know what's changed?

From April 2016 the state pension will be changing to a new ‘flat-rate’ system which is expected to be £155 per week for a single person. However, they’ve also changed the requirements to receive the full amount from 30 years to 35 years of National Insurance contributions – do you know how this will change things for you?

The state pension is paid to everyone who reaches an age that the Government decides is a suitable retirement age. The current age for receiving the state pension is 62 for women and 65 for men (although they are expected to rise for men and women to 66 by 2020 and 67 by 2028).

Under the old system a person needed to have 30 years of qualifying National Insurance contributions (NICs) – either though paying taxes when you’re employed / self-employed, or through credits for those on some benefits (e.g. carer's allowance, jobseeker's allowance, incapacity benefit, employment and support allowance). From April 2016 everyone will need a minimum of 35 years of contributions to receive the full amount of the new state pension.

If you don’t have the full 35 years then it could mean that you won’t receive the full pension amount. This change could have an effect on those nearing retirement age, particularly women who’ve taken time out of work to raise children. For example, someone who has only 25 years worked out of the needed 35 will only get ²⁵/₃₅^th (71%) of the full pension, or around £110/week.

​We’ve put together a quick table so you can check roughly how much your state pension will be if you know how many years of contributions you have made. If you don’t know or are not sure how many years’ contributions you have made you can find out by contacting HMRC. You can either do this online at www.gov.uk/check-national-insurance-record or you can call the National Insurance Helpline via Telephone on 0300 200 3500 or Textphone on 0300 200 3519.

The new flat-rate system also removes pension credit and the second state pension. However, the calculations will be checked for a few years so that if a person would receive a higher amount through the old system, they will still receive the higher amount paid through a ‘protected payment’.

If you are affected by these changes and don’t have the full 35 years then there are some things you can do to increase the amount of pension you receive.

You are able to ‘buy’ extra pension years which is currently around £733 per year of contributions you wish to make up and each of those bought years is worth around £230 per year (£4.42/wk) for the whole pension.  You will be able to buy your ‘missing years’ until April 2023 but if you wait until after April 2019 this may cost you more.

Another way to boost the amount of pension money received is to delay the start of your pension, which is particularly beneficial for those still in work as it’ll mean larger pension payments later. If you reach pension age after April 2016 then delaying by one year means you could get the full pension plus 5.8% extra ( roughly £467/year).

If you’re still not sure what’s best for you and your pension there is an organisation called Pension Wise, backed by the Government and able to offer you free information and guidance on making the best use of your pension. They offer anyone over 50 a free appointment which can be done over the phone or face to face at various locations around the UK. If you’d like to make an appointment with Pension Wise you can visit pensionwise.gov.uk/appointments