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State Pension Guide

State Pension Guide

You may qualify for the basic state pension (or 'state retirement pension') if you are over state pension age. State pension age is currently 65 for men and is gradually increasing to 65 for women.  For more information see changes to state pension age.

Please see our information on the new state pension if you reached retirement age on or after 6 April 2016 as the new rules may apply.

Under the old rules, as well as the basic state pension you may also qualify for an additional pension. This additional state pension scheme has been provided under a number of names - the state earnings-related pension scheme, the second state pension and graduated retirement benefit. Amounts earned in additional state pension are paid alongside the basic state pension.

The amount of basic state pension paid depends on your National Insurance record. To get a state pension you must have paid or been credited with National Insurance contributions for 30 or more years. These rules for the new state pension are more generous.

Deferring your state pension

When you reach State Pension Age you can choose to defer your state pension. If you do this you will get extra money, either as extra state pension payments or in the form of a lump sum payment.

If you take the increase as extra state pension payments then for every five weeks you delay claiming your future weekly allowance is increased by 1%. So delay for a year and you get the full pension plus 10.4% extra. This means that, in general, the longer you live the more beneficial deferring in this way becomes. So it's a decision you'll need to make based upon your circumstances.

If you take the increase as a lump sum then the amount you get is made up of the deferred payment plus interest at 2% above base rate (compounded). After collecting the lump sum, you then get the standard pension. Any lump sum payment cannot push you into a higher tax bracket so will be taxed at the same rate as your other income.

Deferring your basic state pension can be especially useful for those still working. However, you can also defer receiving payments once you've already started claiming, though you can only do this once.

Deferring your state pension and means-tested benefits

Deferring your state pension may have an effect on the way your entitlement to other benefits is calculated.

If you claim Pension Credit while you are deferring your state pension it will be calculated as if you were getting your state pension in full. If you are entitled to Pension Credit you will not build up extra state pension or lump sum for the period you are getting Pension Credit.

If you claim Housing Benefit (but not Pension Credit) while you are deferring the state pension then the amount of pension you are putting off claiming will not affect the calculation of your Housing Benefit.

If you claim tax credits while you are deferring your state pension then the amount of pension you are putting off may not affect the amount payable.

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