The new State Pension: Why many people won’t get what they expect

Woman looking out of window holding cup Good Money Week


MoneyPlus Features Team

17th September 2015 at 9:52am

The State Pension rules change on 6 April 2016 with the aim of giving people more clarity and confidence to help them plan for their retirement.

Making it easier for people to calculate what they’ll get under the new rules sounds ideal – but the reality is it’s really quite tricky to understand, particularly as there will be a transition period.

The news headlines quote a flat rate of £151.25 but some will get less, and others more.

If you’ve based your finances around having a certain amount of money from your State Pension – and perhaps accessed your own retirement savings under recent pension freedoms – finding out means at least you will know what you have to deal with.

The new State Pension: winners and losers

• Those who could do better under the new rules include the self-employed who can’t currently build up what’s called the state second pension – and those who have spent time out of work, such as mothers and carers

• Many with less than ten years of National Contributions will get no State Pension under the new rules

• Those who’ll get less than they would have under the old rules are likely to be those starting work now.

Isn’t everyone supposed to get the flat rate State Pension?

Remember that, as in the old scheme, the new scheme will provide a pension based on your National Insurance contributions. So the level of flat rate pension may be less for those with fewer years of contributions.

Most people reaching State Pension age in the first couple of decades of the new State Pension will have been contracted-out at some point.

People contracted-out when they joined a work or personal pension scheme and either paid lower National Insurance contributions, or some of those contributions were put to a private pension instead of what was called their additional State Pension.

Many would have received the full new State Pension or more if it had not been adjusted to take account of contracting-out. (Source: DWP)

Were you contracted out?

If you were in a work pension scheme which had funds called ‘protected rights’ you will have been contracted out, as will anyone in a Defined Benefit scheme where you get a pension based on your salary. If you were – it’s important to get a forecast.

How much State Pension are you likely to get?

How much you will get depends on your circumstances. If you haven’t reached State Pension age yet, go to and:

• fill in the BR19 application form

• call the Future Pension Centre

• get an estimate of how much basic State Pension you may get.

If you’ve already reached State Pension age, call the Pension Service to get a statement.

The age when you get your State Pension is changing, too, and you can find out what this means for you here.

Top up your State Pension?

You may be able to make contributions to top up your State Pension but there are a lot of factors to consider whether this is right for you. Use the State Pension top up calculator to find out.

For more information, go to

Join the conversation

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A pension is an investment. Its value can go up or down and it may be worth less than you paid in. Investment returns aren’t guaranteed. The value of your investments can go up or down and may be worth less than what was paid in.

This blog and any responses are not financial advice.


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