The state pension - do you know your entitlement?

Friday 31st July 2020

The state pension - do you know your entitlement?

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Article By Richard Hodgson

The state pension - do you know your entitlement?

The ‘new State Pension’ (as it is still referred to on the website) has been in place since 6 April 2016, yet many people remain unaware of what they’ll be entitled to – if anything – and, if they are entitled, how much they will receive and when it will be payable.

The previous complicated system of a basic level of pension plus an earnings-related element (known as the State Earnings Related Pension Scheme or more recently the State Second Pension) was changed to a single tier system. This means that the same amount is payable to everyone who qualifies, irrespective of earnings. Importantly for those currently employed, the amount payable will be the higher of the amount that would have been paid under the old State Pension rules and the amount that would be payable should the new State Pension have been in place at the start of their employment.

The current full new State Pension is £175.20 per week or £9,110 per annum (2020/21 tax year). To qualify for a full State Pension an individual needs to have 35 ‘qualifying years’. For anyone with less than 35 qualifying years, a pro-rata reduction is calculated. As long as an individual has at least 10 qualifying years they will receive something.

The age at which State Pension is payable has also changed. Previously both men and women received their State Pension at age 65, however under current rules this will gradually increase to age 68 by 2046. Despite the fact that this change was only introduced in the 2014 Pensions Act, there is already a proposal to bring this increase forward to 2039. The current State Pension Age for anyone born between October 1954 and April 1960, who may originally have expected to receive their State pension at age 65, is now age 66.

The State Pension age is regularly reviewed to make sure that it is affordable and fair. People are living longer, and spending a larger proportion of their adult life in retirement than in the past. When the State Pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years in receipt of it – around 23% of their adult life. This has been increasing ever since. In 2017, a 65-year-old can now expect to live for another 22.8 years, or 33.6% of their adult life.

To obtain a forecast of the projected State Pension you are likely to receive, along with confirmation of your State pension age, you can visit

Few pensioners ever complain about having too much money in retirement! Whilst the State Pension provides an amount that may meet the basic costs of living, if this was an individual’s only source of income in retirement it may prove to be an uncomfortable existence. The introduction of automatic enrolment for workplace pension schemes goes someway to address this issue and provides an additional income to top up that received from the State.

Many people choose to make additional contributions from their earnings in addition to the amounts required in their employer’s scheme. Others take out additional savings plans to provide for a more comfortable retirement. If you need further information on any of the options or require help with your retirement planning, please do contact us.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs’ practice as at July 2020 and is subject to change.

Brunsdon Financial are not responsible for the content of third party websites.

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