When retirement starts to get closer, you’ll probably be thinking about how to have a comfortable retirement, how much state pension will I get and whether you can rely on your property for your pension.
Data from the Department for Work & Pensions shows the number of people on state pension rose by 140,000 to a total of 12.6 million in 2022, compared to the previous year.
But the amount of state pension you’ll actually receive can vary significantly from person to person, depending on factors such as your age and National Insurance contributions.
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According to a survey by Standard Life, more than a fifth (22%) of retirees were unaware of how much they would receive from the state pension, while a quarter (26%) didn't know how to calculate their state pension payments.
Find out how to calculate how much state pension you will receive, plus how you can boost the size of your retirement fund.
How does the state pension work?
Understanding how the state pension works is crucial when it comes to calculating how much state pension you will get.
With the state pension, the amount you receive comes down to the number of years of recorded National Insurance contributions (NICs) you have.
That’s rather different from a personal pension, where the income you enjoy in retirement will depend on the performance of the stocks and shares you have invested in, as well as whether you opt to access that pot through drawdown or by purchasing an annuity.
There are actually two state pensions in the UK:
Basic state pension
The old, basic state pension applied to men born before 6 April 1951 and women born before 6 April 1953, so those eligible will have already hit state pension age.
The full basic state pension is worth £169.50 per week, though you would need 30 qualifying years of National Insurance contributions (NICs) to get that full amount ‒ fewer years will mean a smaller weekly pension.
New state pension
The basic state pension has been replaced with the new state pension, and it works in much the same way in that the amount you get is determined by how many years of NICs you have.
The full new state pension is worth £221.20 per week, or around £11,502 a year. In order to get the full amount you will need to have 35 years’ qualifying contributions.
How much state pension will I get?
To be eligible for anything from the new state pension, you need to have a minimum of 10 years’ NICs.
If you made NICs before 6 April 2016 ‒ when the basic state pension was replaced with the new state pension ‒ then these are used to work out a ‘starting amount’. This will be either how much you would have got under the old state pension rules, or what you’d get if the new state pension had been in place throughout your working life, whichever is higher.
Each year of contributions after 6 April 2016 will add around £5 to your state pension, until you reach the current maximum of £221.20.
You can get a pensions forecast from the government showing how much state pension you will get, through the Gov.uk website. You will need to register for the Government Gateway to use the state pension forecast tool.
What counts as National Insurance contributions for the state pension?
National Insurance contributions are paid once you are 16 or over and start earning above a particular threshold.
For employees, that threshold is earning over £242 a week, while for the self-employed they are classed as being paid once they make a profit of above £12,570 per year.
Many people have gaps in their National Insurance record, perhaps because they took time out to raise children, care for loved ones, or go back to study. However, you may qualify for National Insurance credits, which can help you plug some of those gaps.
National Insurance credits may be available if you are unable to work due to ill health, or because you are unemployed, or you are caring for someone. Credits are also applied automatically if you receive child benefit.
You can find out more about eligibility for National Insurance credits on the Gov.uk website.
Can I top up my state pension?
If you have gaps in your National Insurance record, and don’t qualify for National Insurance credits, then you can make voluntary NICs. This can boost your overall record and increase the size of the state pension you receive.
Buying a full year of NICs currently costs just over £907, while partial years are cheaper. For each year you buy you get an extra 1/35ths state pension – which is £302 a year - or £6,052 over 20 years.
This means that as long as you live at least three years after state pension age you’ve got your money back.
It’s good value when you consider that the state pension rises each year - by whichever is the highest of 2.5%, wages or CPI inflation, thanks to the state pension triple lock - and becomes more valuable over time.
You can usually buy voluntary National Insurance credits for the previous six tax years.
It is really important to check with the Department for Work and Pensions whether you will benefit from buying voluntary credits as there may be cases where buying the extra credits does not boost your state pension.
The government has launched a new digital Check Your State Pension forecast service that it claims will make it easier for people to boost their National Insurance record, so it's worth checking this out.
What does the triple lock mean for the state pension I receive?
The state pension triple lock was introduced under the coalition government, and is a way of ensuring that pensioners receive a meaningful increase to their state pension each year.
Under the triple lock, the state pension increases at the start of each new tax year by the largest of the following three figures:
The triple lock was paused for one year after the pandemic resulted in a rocketing rate of wage growth. However, it has since been restored, taking the full new state pension from £203.85 to £221.20 in April 2024, an increase of £17.35 per week. The 8.5% rise reflects the 8.5% growth in earnings.
A pensioner receiving the full amount will therefore get an income of £11,502 in 2024-25.
The triple lock is controversial - it's expensive for the government to maintain, and it can mean that pensioners receive big increases at a time when younger people are struggling.
Helen Morrissey, head of retirement analysis at the investment platform Hargreaves Lansdown, says the spiralling cost of the state pension means there should be a proper review into the future of the triple lock - rather than rumours and worries that the government may change or axe it each year.
“The triple lock has played a role in supporting pensioner incomes over the past decade but this needs to be balanced with the needs of the younger working population."
She adds: “The state pension forms the backbone of people’s retirement planning, and they need some certainty on when they will receive it. We need to see a wide-ranging review of the system to see how this can be best delivered.”
How do I claim my state pension?
The state pension is not paid automatically when you reach state pension age. Instead, you need to actively claim it.
The DWP will contact you in the months leading up to you reaching state pension age to explain how you can do this.
If you’ve not received an invitation letter, but you’re within three months of reaching your state pension age, you can still make a claim, and the quickest way to do this is on the government website. To complete your claim, you’ll need the following details:
- the date of your most recent marriage, civil partnership or divorce
- the dates of any time spent living or working abroad
- your bank or building society details
If you don’t need the money immediately, then it may be worth deferring your state pension payments. Your state pension is increased by 1% for every nine weeks you defer. As a result, deferring your state pension by a year will mean the payments are boosted by around 5.8%.
When can I claim my state pension?
You can start to claim the state pension once you reach state pension age.
This is currently set at 66 for both men and women. It is set to rise to 67 between May 2026 and March 2028 and then to 68 from 2044.
When will the state pension be paid to me?
After you’ve made a claim for the state pension, you will get a letter about your payments, which will usually be paid every four weeks into an account of your choice. Note that you're paid in arrears.
The payment day depends on your National Insurance number, although you might be paid earlier if your normal payment day falls on a bank holiday.
| Last 2 digits of your National Insurance number | Payment day of the week |
|---|---|
| 00 to 19 | Monday |
| 20 to 39 | Tuesday |
| 40 to 59 | Wednesday |
| 60 to 79 | Thursday |
| 80 to 99 | Friday |
Source: Standard Life
Who has been underpaid their state pension?
The DWP has been subject to severe criticism in recent years as a total of £571million is owed to pensioners dating as far back as 1985.
The issues tend to centre on married women who were entitled to a state pension based on their husband’s National Insurance contribution record.
However, in many cases this increase did not take place, meaning that the women received a smaller state pension than they should have.
More recently, divorced men and women have been urged to check their state pensions in case there have been errors calculating their payments.
You can check whether you may have been underpaid by using this tool on the LCP website, and make a claim directly to the DWP if you have been underpaid. While the DWP is attempting to correct these underpayments, there remain thousands of pensioners who have been underpaid, in some cases going back decades.
Can I still get the state pension if I retire abroad?
So long as you have built up a sufficient number of qualifying years of National Insurance contributions, then you can still receive the state pension even if you choose to retire abroad.
You will need to start claiming the pension within four months of hitting the state pension age, and you can do so by contacting the International Pension Centre.
You can choose for the pension to be paid either every four weeks or every 13 weeks.
Your state pension will go up each year, so long as you retire in a country that is within the European Economic Area, Gibraltar, Switzerland, or a country with a social security agreement with the UK. There are two exceptions to this latter group: Canada and New Zealand.
If you're wondering how our state pension compares to other countries, check out Revealed: the countries with the most generous pensions.
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