The UK Government Overhauls State Pensions


The new state pension system takes effect from April 6, and thousands without the necessary national insurance contributions to their name will not receive anything.

New state pension scheme

The government describe the new UK pension scheme as both fairer and simpler, in which pensioners will be contributing towards a single flat rate pension. Previously pensioners could contribute towards both a basic flat rate state pension and an additional state pension, which was partly earnings-related. To obtain the full rate under the new scheme, pensioners must have made a minimum of 35 years’ worth of national insurance contributions; pensioners with fewer than 10 years’ worth of contributions will receive nothing. The new scheme applies to those who reach state pension age on or after April 6; men born on or after 6 April 1951 and women born on or after 6 April 1953.

63% of pensioners will receive less

The full flat rate pension is introduced at £155 a week, but this only applies to pensioners who have paid enough national insurance contributions. Some pensioners have chosen to channel their national insurance contributions into a private pension and will thus receive a smaller state pension, and some pensioners have simply not paid enough. According to the government, 63% of pensioners reaching state pension age in 2016-17 will receive less than the full rate under the new scheme.

Improve your pension

According to the charity Age UK there are 50,000 women and 20,000 men in their 50s and 60s who will not receive a state pension when they retire due to having less than 10 years’ of national insurance contributions. Caroline Abrahams, charity director of Age UK, strongly encourages those unaware of where they stand under the new scheme to take action to find out. There are steps pensioners can take to improve their state pension, such as fill in the gaps in their national insurance contribution records. This online calculator from the government is a useful tool when looking into state pension top-up.

If you would like more information on pensions and planning for retirement, please get in touch.