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How much State Pension will I get?

Posted on: 25 May 2016 by James Hester

Understand your new State Pension amount and plan ahead for later life.

How much State Pension

The new State Pension has been introduced for people who reach State Pension age on or after 6 April 2016. Check your State Pension age here.

Under the new system there are different rules depending on whether or not you had NI contributions in the previous system. In both cases, to get a State Pension you must normally meet the minimum qualifying period.

If you had an NI record on 6 April 2016, that record will be brought forward from the old system to work out the amount you will start with in the new State Pension system. This amount is called your starting amount. Most people will be able to add to that starting amount before they reach their State Pension age.

The rules make sure that the amount of State Pension you get for those past contributions as of 6 April 2016 is no less under the new system than what you would have got under the old rules– as long as you meet the minimum qualifying period. You could well get more in future than you would have done.

Calculating a Starting Amount

With the new State Pension, what you will get takes into account what you've built up in the past. Subject to your past National Insurance (NI) record, you may have the full State Pension of £155.65 a week, but in the early years not everyone will get this amount because they may have opted out of some of the State Pension in the past. Anyone who was ‘contracted out’ of the earnings-related parts of the State Pension system in previous years will have paid less NI to the State system and will have built up some private pension to replace the part of their State Pension that they were opted out of.

To calculate your starting amount the qualifying years on your NI contribution record, up to and including the 2015/2016 tax year will be used. Your starting amount will be the higher amount of what you would get under the rules of:

  • the new State Pension that started in April 2016, which is based on 1/35th of the full rate of the new State Pension - £155.65 a week in 2016/17, for each qualifying year, up to a maximum of 35 years
  • the previous State Pension. This has two parts – basic State Pension based on 1/30th of £119.30 a week (the full rate of the basic State Pension in 2016/2017) for each qualifying year, up to a maximum of 30 years, and the Additional State Pension based on earnings.

In order to calculate how much your past record would give you in each case, a deduction may be made for periods you were contracted-out of the Additional State Pension before 6 April 2016.

The higher of the two amounts (based on old rules or new rules) will be your Starting Amount. Your starting amount is the amount you will take forward into the new State Pension system, and is the minimum you will get when you reach State Pension age, provided you have at least 10 qualifying years on your NI record.

Lower Starting Amount

If your starting amount at 6 April 2016 was less than the full new State Pension, you can add more qualifying years on your NI record until you reach the full new State Pension amount or reach State Pension age. Each additional qualifying year can add around £4.45 a week.

Example:

As an illustrative example, if you had a starting amount from your NI record before 6 April 2016 of £120 a week, and you are due to reach State Pension age in May 2021, you have another five years to build up your NI record. Each year adds around £4.45 a week to your State Pension, around £22.25 in total.

That would be £142.25 a week for your new State Pension.

Higher Starting Amount

If your starting amount is more than the full new State Pension, the difference between the full new State Pension and the starting amount is called your “Protected Payment”.

Your Protected Payment is paid on top of your new State Pension and increases each year in line with inflation.

No earlier NI contributions or credits

If you didn’t make NI contributions or get NI credits before 6 April 2016, your State Pension will be calculated entirely under the new State Pension rules. You’ll need 35 qualifying years to get the full new State Pension of £155.65 a week and you’ll usually need at least 10 qualifying years on your NI record to get any new State Pension.

If you have between 10 and 34 qualifying years, you’ll get a proportion of the new State Pension.

Example of a person with no NI contributions or credits before 6 April 2016

If you reach State Pension age after 6 April 2016 and when you reach State Pension age you will have 20 qualifying years on your NI record from after 6 April 2016, your future State Pension will be calculated as follows:

You multiply 20 qualifying years by £4.45 (which is £155.65 divided by 35). Please note that the full rate of new State Pension should be uprated each year so this example is in 2016/17 terms.

Your new State Pension will be around £89.00 per week in 2016/17 terms.

If you were born after 2000 or became a resident of the UK after April 2016, your new State Pension is likely to be calculated in this way.

Check your State Pension online

You can check your State Pension using a new online service. The service will help you find out how much State Pension you may get, the earliest you can get it and if you can improve it. Visit www.gov.uk/check-state-pension

 

Further information

You can find out more about the State Pension at www.gov.uk/yourstatepension and www.youtube.com/pensiontube

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Qualifying year

A complete tax year during a person’s working life in which they paid, were treated as having paid or were credited with National Insurance contributions on earnings above the weekly ‘Lower Earnings Limit’ (£112 a week in 2016 to 2017).