The State Pension scheme

 

The government introduced a new State Pension scheme in April 2016. The new scheme pays a ‘flat-rate’ pension up to a maximum of £168.60 a week (2019-20).

 

In reality, some people will get more than this and others less:


Why you might receive more than the maximum flat-rate

  • If you would have received a higher State Pension under the previous State Pension scheme you’ll still be entitled to the higher amount (the previous State Pension scheme included an earnings related element which could result in a higher figure).
  • If you choose to delay receiving your State Pension when you reach State Pension Age, it will be increased when you eventually decide to take it. Find out more here.

 

Why you might receive less than the maximum flat-rate

  • To receive the full amount you must have paid National Insurance (NI) contributions (or received NI credits) for 35 years (otherwise the amount you receive will be proportionate). You can choose to pay voluntary contributions to make up for any shortfall you may have.
  • You will receive less if you were ‘contracted out’. This means you were opted out of the additional state pension scheme that existed before April 2016. If you were in a pension scheme or personal pension plan you may have been ‘contracted out’.

 

Please note that if you have less than 10 years NI contributions or credits you won’t normally be entitled to any State Pension.

 

If you are over 55, you can apply for a State Pension statement, which will explain what your entitlement is based on the NI contributions you’ve paid to date.

 

What happens if you paid reduced rate NI contributions?

 

Under the new State Pension everyone will build up entitlement based on their contributions. Previously, it was possible for married women, and some widows, to pay a reduced rate of NI contribution (sometimes called ‘Married Woman’s Stamp’). This meant that they could qualify for additional pension based on their husband’s NI contribution record. Anyone in this situation can still benefit from their husband’s contributions if this would increase their State Pension under the new scheme. There are a few requirements that have to be met. You can find out more here.

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