The new State Pension will be introduced on 6 April 2016 for everyone reaching State Pension age on or after that date. This reform means that the current, complicated, multi layered system of basic and additional State Pensions will ultimately be replaced with a clearer, single pension amount.
To determine your new State Pension, a ‘Starting Amount’ calculation is made. This compares the amount of State Pension you would receive under the current State Pension rules and under the new State Pension rules based on your National Insurance record as of 6 April 2016.
Whichever is the higher of these figures will become your Starting Amount for the new State Pension. This will form the base on which, in most cases, you may be able to add to your State Pension under the new system.
You may be able to do this in one or more of the following ways:
Continue paying National Insurance
If you continue working and paying National Insurance contributions, you may be able to increase your State Pension until you reach State Pension age or until you have reached the full amount of new State Pension (£155.65 a week in 2016/17), whichever happens first. You can find out your State Pension age here.
Claim National Insurance Credits
National Insurance credits can help fill gaps in your National Insurance record. They may increase the amount of new State Pension you get when you reach State Pension age.
You can get credits in different ways, for example:
- Caring for one or more disabled people, for at least 20 hours a week.
- Receiving certain benefits, such as Jobseeker’s Allowance, Employment and Support Allowance or Carer’s Allowance.
- Caring for a grandchild or other family member under the age of 12.
You can find out more about National Insurance credits at www.gov.uk/national-insurance-credits/overview.
Make Voluntary Contributions
You may have gaps in your record if you have not paid or been treated as having paid National Insurance contributions or if you’re not eligible for a National Insurance credit for a particular tax year. However, you may be able to make voluntary contributions to fill gaps you have for recent years on your National Insurance record. You can read more about paying voluntary contributions at www.gov.uk/voluntary-national-insurance-contributions/why-pay-voluntary-contributions.
Defer your State Pension
By choosing to defer claiming your State Pension when you reach State Pension age, you could potentially build up extra State Pension.
If you reach State Pension age on or after 6 April 2016, your State Pension will increase by 1% for every 9 weeks you put off claiming. You will receive your extra State Pension as a higher weekly payment. Of course, when you start taking your extra State Pension, you may pay tax on it.
Please be aware that not everyone can get a higher pension by deferring so you need to make sure you are eligible. You can find out more, including how much extra State Pension you could receive, at www.gov.uk/deferring-state-pension.
Find out more
You can find out what the new State Pension means for you by visiting www.gov.uk/yourstatepension.
Anyone who is aged 55 or over can request a new State Pension statement. This will give you an estimate of your State Pension under the new rules, based on your current National Insurance record. You can find out more about this at www.gov.uk/check-state-pension.