State pension payments are based on a person’s National Insurance record, with 35 years of contributions needed for the full new state pension of £175.20 per week. Some people may get more than the full amount if they’ve built up entitlement to the “additional” state pension under the old system, sometimes known as the state second pension or SERPs.
Additionally, some retirees may get less than the full amount if they were contracted out of the additional state pension.
For many people, their National Insurance record up to April 6 2016 was converted into a “starting amount” under the new state pension rules.
The Government assured that these amounts will not be lower than the amount that would have been received under the old system.
With all these rules, it can be easy to get lost with what one is entitled to in retirement and Steve Webb, the former Minister for Pensions, recently addressed this.
“The Department for Work and Pensions should consider whether the time has come for an even simpler state pension system.”
To help people see how much they could/will be getting in retirement, the Government has a state pension forecast tool on their website.
This free-to-use tool will allow users to find out how much state pension they could get, when they can get it and how they could increase it if need be.
To use this tool, a Government gateway or gov.uk verify account will need to be created.
State pensions cannot be received until a person reaches their state pension age, which is currently sitting at 66 but will be increased in the coming years.
It should be noted that state pensions will not be paid out automatically, they must be claimed and this can be done up to four months before reaching state pension age.
When a claim is processed, initial payments can take up to five weeks to arrive.
Beyond this, payments will arrive once every four weeks into an account of the claimants choosing.