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Most people in the UK will be entitled to a State pension when they retire. In this article, we'll explain what the State pension is, how it works and how much you can expect to receive when you stop working.
The State pension is a regular payment from the government to you that starts when you stop working. Essentially, it's a regular income designed to help you live comfortably when you're older.
Everyone in the UK is eligible, although you need to have made enough National Insurance contributions to qualify.
The amount you receive depends on a few different factors, such as when you were born, how much National Insurance you've paid, and how long you've been in the UK. Let's look at that in a little more detail.
Today (2022/23 tax year), the full State pension pays out £185.15 per week - that's £9,627.80 a year. This is what's known as the 'new' State pension.
If you're a man born before 6 April 1951, or a woman born before 6 April 1953, you'll get a previous version called the 'basic' State pension - up to £137.60 per week, or £7,155.20 a year. You may also be entitled to an 'additional' State pension if you chose to contribute to a State pension scheme.
You can find out more about the additional State pension, including if you qualify, by visiting the government's website.
In the future, the value of the State pension will change. The UK government has set out a series of safeguards to protect the value of the State pension as the cost of living increases over time.
Each year, the State pension increases by the rate of inflation, average earnings growth, or 2.5%, whichever is higher. These checks are known as the triple lock.
It's important to remember that not everyone is entitled to the full State pension. You can work out how much you'll receive further down in the article.
The State pension amount you receive depends on your National Insurance contributions. To be eligible for the minimum State pension, you'll need to have paid National Insurance for at least 10 years. Today, this would give you a payment of £52.90 each week.
To get the maximum payout outlined above, you'll need 35 years of 'qualifying' National Insurance contributions. Here's how the government defines a 'qualifying' year.
As long as you've done at least one of the above for 35 years (or more), you'll be eligible to receive the full State pension of £179.60 a week.
The State pension for couples is now calculated separately. You and your partner will both need to earn qualifying years on your own by making National Insurance contributions.
This means if you both qualify for the maximum State pension, you'll both receive £370.30 a week (or £98,255.60 a year) collectively.
If you reach State Pension age on or after 6 April 2016 and you get a divorce or dissolve a civil partnership, your State pension won't need to be 'split' between each of you. This is part of the rules of the 'new' State pension.
However, if you claim any 'additional' State pension, this may be classified as a 'protected payment'. You could be ordered to share this in court.
You can check State pension eligibility at any time on the UK government's website.
You can also use the Government's State Pension Forecast tool to check your National Insurance Contribution record. You just need to answer a few simple questions to find out how much State Pension you could receive. It will also tell you when you can claim it and how you can gain more qualifying years to help boost your State Pension income.
Today, the State pension age is 66 for both men and women. This is the age when you can start to claim your State pension.
However, the State pension age is scheduled to rise in the future, increasing to 67 by 2028, and 68 by 2039. It's also likely the State pension retirement age will increase further beyond that.
This is why it's important to consider supplementing your State pension income with a private or workplace pension of your own. Saving a little extra now will help you to stop working earlier.
When you pass away, payments from your State pension will stop. However, in some circumstances, you may pass a part of your State pension payments onto loved ones as part of your estate.
If you pass away after the UK State pension age but were yet to claim any of your State pension, your beneficiaries may be entitled to up to three months of your unclaimed payments.
To check if you're able to pass on any of your State pension to your loved ones, get in touch with the Pension Service.
You may be able to claim extra State pension if your partner passes away before they claim their State pension. Remember, to claim extra State pension payments from your late partner, you'll need to be over State pension age yourself.
If you remarry or enter a new civil partnership before you reach State Pension age, you won’t be able to inherit any additional State pension from your previous marriage. Again, the best way to see if you're eligible is to contact the UK Pension Service.
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When you reach State pension age, you'll need to start claiming your payments by contacting the government.
You can begin your claim up to four months before you reach retirement age. The government should also send you a letter no later than two months before you reach State pension age with instructions.
Here's how to apply for the State pension:
As with any private or workplace pensions, payments from your State pension are liable to income tax.
Unlike a salary from a job, your State pension payments without any have tax deductions beforehand. The amount of tax you'll pay depends on your total annual income.
If you claim your State pension in addition to a private or workplace pension and withdraw more than £12,570 per year, you'll need to start paying tax.
Head out to our guide on pension tax for the full details.
You can also delay (or defer) when you start claiming your State pension.
By pushing back when you start taking payments, you could increase the amount you receive. For every 9 full weeks, you defer taking your State Pension, the value increases by 1%.
That means if you waited a whole year to start claiming (you waited until you're 67), the amount of money you get from the government would increase by 5.8%.
For someone eligible for the full State pension, this would see your payments rise from £185.15 per week to £195.85 per week.
Remember, the State pension amount also increases each year in line with the cost of living. This is protected by the triple lock.
As you need to contact the Pension Service to start claiming, you do not need to take any action to defer your State pension.
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