With today’s launch of the new State Pension, we’re starting to bring clarity to a system that few people truly understand.
For many of us, the legacy of the old system means things won’t necessarily become simpler overnight. But today is an exciting milestone in a revolution of State Pensions; one that will see many of these old complexities consigned to history.
Take a look at our latest mini-guides to the new State Pension on our PensionTube channel.
What the new State Pension means for you
If you reach State Pension age on or after today (6 April 2016), you will get your State Pension under the new system. You can find out more at www.gov.uk/yourstatepension.
If you’ve already reached State Pension age before today, your State Pension won’t change. You can find out more at www.gov.uk/mystatepension.
You can check your State Pension age at www.gov.uk/state-pension-age. The State Pension age is now regularly reviewed and may change in the future.
How does the new State Pension work?
For future generations, working out the State Pension is much simpler.
Each qualifying year of National Insurance (NI) contributions you add (through work or credits) will give 1/35th of the full new State Pension amount (about £4.45 a week). With at least 35 qualifying years on your NI record in the new system you would get the full amount of new State Pension (£155.65 a week - 2016/17 rate) when you reach State Pension age.
For anyone who has NI contributions or credits before 6 April 2016, the legacy of the old system means things will continue to be a bit more complicated. Rest assured though, our priority is to make sure the system treats everybody fairly and everyone gets the State Pension they are entitled to.
We are not just changing things overnight. Because people have paid different amounts into the system over past years and decades, it would be unfair to wipe that all out and start from scratch. But the State Pension will become much easier to understand in future.
Your State Pension will be based on your ‘Starting Amount’.
Everyone will have a ‘Starting Amount’ in the new system, based on the number of qualifying years on their NI record on 5 April 2016.
Your Starting Amount will look at how much State Pension you would have got under the “old” and “new” rules based on these qualifying years. The higher of these amounts is your Starting Amount for the new system.
If your Starting Amount is lower than the full new State Pension amount (£155.65 a week in 2016/17) you can add to it with qualifying years in the future. Regardless of your earnings or the type of NI credits or contributions on your NI record, you will add the same amount of State Pension (about £4.45 a week for each year), until you reach either the full amount or your State Pension age, whichever comes first.
Check your State Pension
You can now check your State Pension at any age, throughout your career. We’re testing a new online ‘Check your State Pension’ service, available to people of working age. In order to use the online service you will need to confirm your identity using an identity verification service.
To test this service, visit www.tax.service.gov.uk/checkmystatepension.
Aged over 50? I would encourage you to request a State Pension statement. This will give you a personalised estimate of how much State Pension you may get at State Pension age, based on your current NI record. Over half a million new State Pension statements have been issued so far. You can find out how to request a statement at www.gov.uk/check-state-pension.
Find out more
For more information about the new State Pension, visit www.gov.uk/new-state-pension.