The new state pension system that began on April 6, 2016 replaces the old two-part pension with a single flat-rate payment of £155.65 per week. To receive the full amount, a person must have 35 years of National Insurance contributions; the minimum to receive any payment is 10 years. Some people who built up higher amounts under the old system can receive additional protected payments on top of the £155.65 weekly rate.

1. The state pension has undergone a huge change. While the
Government's aim is to make it fairer for all and easier to understand
your retirement income, it’s still a minefield for most - and some will
lose out with the overhaul.
This guide helps you understand the new 'flat-rate' £155.65 state pension
which came into force on 6 April for those who reach their state pension
age on or after this date.
MoneySavingExpert.com » Saving » New State Pension
If you reach state pension age on or after April 6 2016
A brand new state pension was ushered in on 6 April 2016 as a result of a massive shake-up. The new payout has been designed to make the whole
process easier to understand though it's still far from simple.
However, it's only for those who reach state pension age on or after 6 April. This means millions of older people will be unaffected and carry on receiving
their state pension under the old system (http://www.moneysavingexpert.com/editorial/4636839320,24903) at the same time as the new one comes into
effect.
Here are the key differences at a glance...
Just as under the old system, you receive the new state pension when you reach the Government's official retirement age. But what that is depends on
when you were born and your gender.
To save the state money, the official retirement age is gradually being raised. While many women currently get the state pension at age 63 and men at age
65, the thresholds are moving up. They will rise to at least 66 for both by 2020, and possibly to 68 in the 2030s.
The rising age for women has triggered much controversy. Campaign group Waspi - Women Against State Pension Inequality - has fought
(http://www.moneysavingexpert.com/news/savings/2016/01/womens-state-pension-petition-secures-second-parliamentary-debate) against the pace of
change in women's state pension age.
It argues that the speed of the rise in women's age has caught millions unawares and says the Government has not properly communicated the changes to
them, whether by post, online or by advertising. However, the Government has so far refused to change the speed of the age rises, or make any
concessions.
Amy (http://www.moneysavingexpert.com/news/biogs/#Amy) | Edited by Sam D ()
Updated April 2016
This guide isn't for you. Instead, see our Old State Pension
guide for more.
This guide isn't for you. Instead, see our Old State Pension
guide for more.
Please suggest any changes or questions in the New State Pension (http://forums.moneysavingexpert.com
/showthread.php?p=70415925#post70415925) discussion. Thanks to Alan Higham of PensionsChamp (http://www.pensionschamp.com/) and Danny Cox of
Hargreaves Lansdown (http://www.hl.co.uk/) for fact-checking and their help putting the guide together.
OLD STATE PENSION NEW STATE PENSION
How it's made up 2 parts: basic pension + additional pension 1 flat rate payment + any 'protected payments'
Maximum weekly payout £119.30 basic (+ avg £40 additional) £155.65 + any 'protected payments'
NI years needed for full rate 30 35
NI years to qualify for min payment Any 10
BORN OFFICIAL RETIREMENT AGE
Men Before 6 December 1953 65
On or after 6 December 1953 Rises from 65 to 66 between December 2018 and April 2020.
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New state pension: will you get £155 payout? - MSE http://www.moneysavingexpert.com/savings/state-pensions
1 of 7 22/May/16 23:01

2. To find your exact retirement age see the Government's State Pension Age Calculator (https://www.gov.uk/calculate-state-pension).
It might feel like an official life milestone but you won’t get your State Pension automatically – it’s up to you to claim it. Four months before you reach your
state pension age – currently 65 for men, 63 for women - you should get a letter from the Government’s Pension Service telling you what to do.
If you still haven’t got a letter three months before your State Pension age, call the telephone claim line where staff will be able to discuss with you what you
need to do.
You’ve three ways to claim: online by filling in a claims form on-screen (https://www.gov.uk/claim-state-pension-online); over the phone by calling 0800 731
7898; or by downloading a claim form at gov.uk (https://www.gov.uk/), printing it off and sending it to your local pension centre whose address can found on
the Government website.
Assuming you're the right age, what you get depends on how many so-called 'qualifying years' of
National Insurance (NI) contributions you have. These are earned over your lifetime and the number
you get will depend on how many years you're in work.
You can also build them up as National Insurance credits instead, for time spent raising a family, if you
care for the sick or disabled, or have spent time enrolled in full-time training.
Here's what you need...
Under the new state pension rules, you need a minimum of 10 years before you'll get any payout at
all. Reach this and you'll be paid 10/35ths of the total - currently £155.65, or about £44. These
qualifying years can be from before or after 6 Apr 2016 and don’t have to be 10 years in a row - they
can be dotted about over a much longer period.
However, if you don't manage to meet this minimum, you won't get a penny (although pension credit should be available). Under the old system, there was
no minimum threshold - you could still get a small payout even if you had just 4 or 5 years.
You'll need 35 years to get this full headline rate (which itself will rise each year by either 2.5%, inflation or average wage growth - whichever is highest.)
Crucially, you don't have to start from scratch from 6 April 2016 - any years earned before this date will count as well as the ones after it.
And some people can get more. Under the old state pension rules, workers were able to build up what's known as the Additional State Pension - a top up
to the former basic state pension. Although the new rules have now scrapped this top-up, the Government has allowed many workers in their 40s, 50s and
early 60s to keep any of this extra cash already amassed.
It's part of the Government's pledge that people who worked to build up a healthy state pension under the old rules shouldn't lose out under the new one.
To make it work - and it is fiendishly complicated - what you'll get depends on a so-called 'starting sum' calculation. This compares what you'd have been
entitled to under the old and new regimes - and, in a nutshell, you'll get the higher of the two.
Say you earned an extra £65 a week in Additional State Pension over your working life under the old system which would have given you £184.30 a week.
This is well over the new £155.65 limit but the rules allow you to keep this extra £28.65 a week.
This extra money is known as your 'protected payment' and will be highlighted on your state pension statement.
You'll get the equivalent value of the state pension according to the total number of years you've built up - so 23 years would give you roughly two thirds of
the current £155.65 payout, or about £102.
As a guide to what you might get, multiply the number of years you've got by £4.44 - this figure is what each qualifying year is roughly worth.
There's a potentially nasty sting in the tail, though, for many people who thought they had built up a given number of years. Not all NI years actually count
when working out how much you're entitled - this is because they're not treated as 'full' years - and it could mean you end up with much less than you
imagined (see 'contracting out' below).
BORN OFFICIAL RETIREMENT AGE
Women Before 6 April 1950 60
On or after 6 April 1950 Rises from 60 to 66 between April 2010 and April 2020.
New state pension: will you get £155 payout? - MSE http://www.moneysavingexpert.com/savings/state-pensions
2 of 7 22/May/16 23:01

3. Quick question
You can get an estimate of your state pension based on your current NI record by going online (https://www.gov.uk/state-pension-statement). Remember
this is only an estimate however, and what you actually receive when you retire may be different, especially if the pension system changes again in future.
To gain a qualifying year, you need to earn a set minimum amount of money during a tax year (6 April to 5 April) - and pay the required NI contributions. For
2016/17, these minimums are:
In past years, the amount was lower. But it has always been a similar figure in relation to average salaries. So only those on very low wages could have
missed out.
If you were working full time, even on the minimum wage, or even just a few days a week throughout the year, it's likely you earned a qualifying year. These
qualifying years can be from before or after 6 Apr 2016 and don’t have to be 10 years in a row - they can be dotted about over a much longer period.
Rememer, you'll need at least 10 to qualify for any payout at all.
If you’re unable to work - for example due to long-term illness or you’re caring for someone - you may be able to get NI credits. With some benefits, such as
child benefit for a child under 12, jobseeker’s allowance, and employment and support allowance, you get NI credits automatically.
There are some instances where it isn't done automatically and you have to apply; for example if you care for someone for at least 20 hours a week, you
may be able to apply for carer’s credit.
You can check if you’re eligible (https://www.gov.uk/national-insurance-credits/eligibility) for credits, but you need to wait until the tax year - which runs from 6
April to 5 April - is over before you can apply for credits for the previous 12 months.
HMRC regularly writes to people where a gap appears in NI contributions, so if you've had one of these letters it's quite possible you've been affected by
this. First, ensure you check whether you actually worked during these years.
If you haven't had such a letter and want to check your situation, you can go to the Government's website (https://www.gov.uk/check-national-insurance-
record) or call its National Insurance helpline on 0300 200 3500.
Ask it:
Those NI contributions or credits on your record under the old state pension will still count towards your new state pension – you don't have to start from
scratch with your contributions under the new system. For more on NI contributions, see the Q&As (#faqs) below.
It's estimated less than half retiring under the new system will be eligible for the full £155.65 flat-rate sum in the first five years. This is chiefly due to the
numbers of people who won't have enough qualifying NI years because they've been what's known as 'contracted out' of the old state pension in the past.
How can I find out how much state pension I'm on track for?
£112/wk, £486/mth, £5,824/yr for employees
£114.70/wk, £497/mth, £5,965/yr for the self-employed
New state pension: will you get £155 payout? - MSE http://www.moneysavingexpert.com/savings/state-pensions
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4. It's anything but simple so here's a breakdown...
Under the old system, the state pension is made up of two parts:
If you are, or were, in what is known as a defined benefit company pension scheme – where what
you’re paid in retirement is a set proportion of your final salary – you’re likely to have been 'contracted
out' of the additional state pension.
In a nutshell, it meant workers paid a lower rate of NI contributions. This was because - in return - they
will have paid extra the cash into their workplace scheme, or had it paid in for them by their employer.
Millions of workers with company pensions in the public and private sector are affected. Some
stakeholder- and personal-pension schemes were also contracted out.
This means you won't get £155.65 despite having what you thought were 35 years of NI contribution. What counts is 35 years of full contributions - not ones
where you paid a lower NI rate.
So the Government has decided it will deduct a sum from your new state pension - the equivalent of what you missed out on by being contracted out. It says
that, while you'll get less than the full £155.65, retirees will still be paid what they would have got under the old state pension.
The sum is what the Government has coined your 'contracted out pension equivalent' (COPE) amount. If you ask for a state pension statement
(https://www.gov.uk/state-pension-statement) from the Government it will include this amount.
However, while many people will get a private pension boost equivalent to this deduction, it could be a lot less than the state pension they gave up - much
depends on the company scheme and investment performance. To make matters worse, many workers won't even have realised they were contracted out,
so will learn of their lower pension as a shock.
Quick questions
So-called ‘contracting out’ saw staff agree to give up their right to additional state pension.
The idea was that in return for doing so, you (and your employer) would pay a lower level of NI, giving you a bigger pay packet.
On top of this, your private pension provider would then boost your retirement fund with an extra bit of cash.
Behind it all lay a desire to cut the State’s pension bill.
If it could persuade workers to give up their right to the additional state pension – the actual act of ‘contracting out’ – the Government could make huge
savings and let private companies take on the strain instead.
In theory, the worker would benefit from having the extra cash in the stock market which then paid you an income when you eventually retire.
You may have to dig out old pay slips or P60s. If you were contracted out via a personal pension, you'll need to get your pension provider to confirm. You
can check with your pension provider if you’ve been contracted out in the past. The Pension Tracing Service (https://www.gov.uk/find-lost-pension) may be
able to find your pension providers’ details if you’ve lost contact with them.
You’re more likely to be contracted out if you work in public sector organisations and professions such as:
As additional state pension will no longer exist from April 2016 with the new flat-rate pension, contracting out will also cease to exist, meaning once all this
complexity has been correctly included in your starting amount you can forget about it.
It also means those people who have been contracted out will now pay more NI at the standard amount, as will their employer, which may well pass its
extra costs onto the employee too - this could take the shape of either higher scheme pension contributions, or a reduction in the scheme pension for the
future.
The basic state pension, and
Additional state pension, sometimes referred to as state second pension or SERPS (State Earnings-
Related Pension Scheme).
Why did 'contracting out' happen?
How do I know if I’ve been contracted out?
the NHS
councils
fire service
civil service
police forces
armed forces
teaching
New state pension: will you get £155 payout? - MSE http://www.moneysavingexpert.com/savings/state-pensions
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5. Regardless whether you're under the old or new state pension system, there are ways you can boost
the amount of state pension you'll receive. However, they need to be considered carefully before
deciding what to do.
You can put off claiming your basic state pension. This can be especially useful if you're still working,
as it means you'll get larger pension payments later. You can also defer receiving payments once
you've already started claiming, though be careful as you can only do this once.
Here's an example of how it can work.
Bernard's due a £7,000/year state pension (he's at the full state pension rate, plus he has some
second state pension). He's going to reach state pension age after 6 April 2016. He decides he can
afford to defer his state pension for one year. He gets an increase of 5.8% for each full year he
deferred, meaning his yearly pension increases to £7,406 (or an extra £7.80 per week).
If you've got spare savings and can afford to be without the cash in the short-term, it's possible to replace some missing NI qualifying years - up to £733 for
each gap year.
This could lead to a big increase in your basic state pension payout over your retirement.
In a nutshell, you pay a one-off lump sum to buy a higher state pension sum. Assuming you live long enough, this extra cash you earn from a bigger weekly
state pension could be worth £1000s over a lifetime.
The key that defines whether it's worth bothering is how many NI years you already have. HMRC should send notices to people with NI gaps and is
developing a website where you will be able to log on and see for yourself.
If you haven't received one or can't find it, don't worry. You can check whether you have any gaps online by getting a state pension statement
(https://www.gov.uk/state-pension-statement) or calling the Future Pension Centre on 0845 3000 168 and it'll send you a statement.
Quick questions
If you're eligible, and you could benefit by boosting, it's time to get serious on the nitty-gritty. When buying extra years, you have to buy what are called
'class 3 NI contributions'.
Those retiring after 6 April 2016 can buy up to 10 years' contributions. See the table below for prices...
There are some who may not be able to, or shouldn't, buy additional years.
How many years can you buy?
NI YEAR COST TO BUY NOW
2011/12 or before £689
2013/14 £705
2014/15 £723
2015/16 £733
Rounded to nearest pound. Source: HMRC
Could you be excluded from buying NI years?
Paid reduced NI? Married women sometimes paid less NI (known as the 'small stamp' or 'married woman's stamp') in return for some maternity benefits.
But those who signed up to this can't replace any missing years where they paid reduced NI for the whole year.
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6. State pensions are incredibly complex, and it's not easy to calculate whether you'll be better off buying extra years or not.
You'll need to do a lot of research to work out if it's really worth your while.
Much will depend on various factors: how many existing years you already have; whether you can afford to give up the cash needed to buy the extra years;
and make a judgment on your health (i.e. are you likely to live long enough to make it worthwhile?
We've a simple table to give you a rough idea of what to expect. However, everyone's circumstances are different so the figures are only an indication. As
a general rule of thumb, each year you buy will boost your pension by up to £230/yr.
If you don’t have enough money to buy additional NI years to get the full state pension, your payout may be boosted if you apply for pension credit.
Pension credit is an income-related benefit for low earners who do not qualify for the full basic flat-rate of £155.65 a week. All your money, including savings,
will be assessed, and if you don’t have enough to buy extra NI years you’ll be topped up to the full basic state pension amount of £155.65.
If you're eligible for pension credit you'll still be entitled to other benefits such as housing benefit. See the Pension Credit guide
(http://www.moneysavingexpert.com/savings/pension-credit) for full information.
Already at the maximum number of years? If you try to buy further years that would take you over the maximum number of years allowed, you'll normally
be prevented from doing so by the Government.
What should I consider to see if it's worth it?
NO OF MISSING YEARS BOUGHT ANNUAL BOOST TO YOU COST YRS TO BREAK EVEN
5 £1,156 £3,445 2yrs 11 mths
10 £2,312 £7,576 3yrs 2mths
The Government says the old equivalent (http://www.moneysavingexpert.com/editorial/4636839320,24903) is too expensive to keep offering to new
pensioners, hard to understand and unfairly biased against many - notably women - who took time off work to care for others or raise a family.
For years, this has made it hugely difficult to work out how much you'll get - and therefore more tricky to plan your retirement finances.
Problems lie in the old system being made up of two parts: a 'basic' state pension (worked out according to your number of National Insurance years)
and a 'second state pension' also known as S2P, Serps or the Additional Rate.
While the first part was simple enough, the latter caused huge problems with its complexity - particularly when workers opted out of it (knowingly or
otherwise) in a process called 'contracting out' which has left many out of pocket.
The new payout has been designed to make the whole process easier to understand though it's still far from simple.
The new set-up is also a huge boost for the self-employed who lost out hugely under the old system since they were unable to build up any second state
pension.
Under the old rules if you were self-employed you weren't included in the additional pension, so the most you could get was £119.30, now you can get
£155.65 – a massive boost.
However, it's only for those who reach state pension age on or after 6 April. This means millions of older people will be unaffected and carry on receiving
their state pension under the old system (http://www.moneysavingexpert.com/editorial/4636839320,24903) at the same time as the new one is ushered
in.
So to make things easier we've two guides – one for the new pension and one for the old. If you're already receiving your state pension under the current
system there's no change for you.
No. Having more than 35 qualifying NI years doesn't boost how much state pension you receive. The only way you may get more is if your 'starting sum'
under the new rules is higher than the maximum £155.65 pension.
At the same time, if your starting sum is lower than the new £155.65 rate, you can continue to earn extra NI years from April 6 2016 to build up your state
pension until you reach retirement age or reach the £155.65 maximum - whichever comes first.
New state pension: will you get £155 payout? - MSE http://www.moneysavingexpert.com/savings/state-pensions
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perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.
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Yes and No. Under the new flat-rate state pension, class 2 NI contributions made by self-employed people who make a profit above £5,965 (in 2015/16),
and class 2 and class 4 NI contributions for those with a profit above £8,060 (in 2015/16), will be treated the same as employee contributions and count
toward the new state pension in the same way. This will include any contributions made before 6 April 2016.
Self-employed people are the big winners in the new state pension. Under the old rules if you were self-employed you weren't included in the additional
pension, so the most you could get was £119.30, now you can get £155.65 – a massive boost.
Yes. You can, as long as you've paid enough UK national insurance (minimum 10 years) to qualify. If you've paid into a social security system overseas
that has a dual agreement with the UK, or is in the EU, then those years can count toward the 10 years.
For example, if you have five years in the UK and five years in Portugal, then you'd get 5/35ths of the UK state pension. This is because the two periods
combine to give 10 years, which meets the qualification, but only the five years in the UK actually count toward the amount. If you're unsure how many
years you have you can ask for a state pension statement (https://www.gov.uk/state-pension-statement).
To claim you need to be within four months and four days of your state pension age. You'll also need to contact the International Pension Centre. If you
live part of the year abroad you have to choose which country you want your pension to be paid in. You can’t be paid in one country for part of the year
and another for the rest of the year.
You’ll be paid in local currency – the amount you get may change due to exchange rates – and you can choose to be paid every four or 13 weeks. If your
state pension is under £5 per week, you’ll be paid once a year in December.
It's also worth noting, if you live abroad in certain countries your UK state pension will be frozen, so there are no increases.
Your state pension will be calculated entirely under the new state pension rules. This is more likely to affect you if you were born after the year 2000, or
became a resident of the UK after 2015.
Yes. Like the old state pension, the headline rate will rise with the so-called triple lock.
This goes up every April by the biggest of the following: -inflation in the previous September (using the Consumer Prices Index); - the increase in
average earnings; - or 2.5%.
For those who will receive more than the new £155.65 rate, the extra 'protected' income is to rise only by inflation.
This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.
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Always remember anyone can post on the MSE forums, so it can be very different from our opinion.
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