Pensions - Articles - The winners and losers from the new state pension

Following a Freedom of Information request, Canada Life has uncovered the number of people qualifying for the full new state pension following its introduction in April 2016.

 The official figures reveal almost two in five pensioners (365,290 people or 38% of claimants) receive less than £150.00 a week, while a further 314,290 people (33% of claimants) receive more than £150.00 a week.

 The data also shows 282,447 pensioners (29% of claimants) are receiving a new state pension from April 2016 with a ‘protected payment’, which essentially means they receive more than the new full state pension as benefits built up over the old and new system are worth more than the new flat rate.

 People can receive less than the full flat rate state pension when their NI record is incomplete or have paid less than the 35 qualifying years required under the new rules (usually through periods of contracting out).

 Andrew Tully, technical director, Canada Life commented: ‘The state pension is the foundation of most people’s retirement plans, and yet this data shows more than half of those eligible to claim the state pension under the new flat rate system receive less than the full amount. Given the various changes that have been introduced over the years, it’s not surprising people find the whole system difficult to understand.’

 State pension tips
 - Go online or contact DWP for an up-to-date state pension forecast. DWP will use your NI record under old and new state pension rules to calculate your state pension
 - Your ‘starting amount’ can be less than, more than or equal to the new full state pension
 - Consider paying voluntary NI contributions if there are gaps in your records (you can only usually go back six years)
 - There is no benefit in paying voluntary NI contributions if you’ve built up 30 years under the old system before April 2016
 - Ensure you’ve claimed credits for periods where you’ve not worked, for example when unemployed or looking after children. This should happen automatically but mistakes can and do happen, especially if you are self-employed.
 - You can claim for NI credits if you are caring for parents or grandchildren
 - If you’ve been contracted out for any period before April 2016 you will have paid lower NI and therefore receive a smaller state pension. Your private pension will have an element of ‘Contracted Out Pension Equivalent’ or COPE which will allow for this.
 - Consider deferring your state pension (but it is less financially generous than previously)
 - Contact The Pensions Advisory Service or Pensions Wise for free guidance

 Andrew Tully concludes: “The state pension can be a minefield but ask for a forecast of what you are likely to receive and mind any contribution gaps. And remember, it is only really there to provide a basic standard of living when you retire. Take control and seek professional advice if you plan to make the most of your retirement.”
 The data doesn’t show the number of people who receive between £150 and £164 a week (£164 as that was the amount from April 2018 and the data is as at August 18).

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