The State Pension is a regular payment from the UK government to people who have reached State Pension age and have built up enough qualifying years through National Insurance (NI) contributions or NI credits. It forms the foundation of retirement income for most people in the UK, alongside any workplace pension or private savings.
The current system, known as the new State Pension, applies to people who reached State Pension age on or after 6 April 2016.
How Much Is the State Pension?
The full new State Pension is a flat weekly amount that the Department for Work and Pensions (DWP) uprates every April. Under the triple lock, the increase is the highest of:
- Average earnings growth
- Consumer Price Index (CPI) inflation
- 2.5%
GOV.UK publishes the current full rate. Not everyone receives the full amount. Your State Pension is based on the number of qualifying years on your National Insurance record.
| Qualifying Years | State Pension |
|---|---|
| 35 years | Normally the full pension if your NI record started after April 2016 |
| 10 to 34 years | Normally a proportional amount if your record started after April 2016 |
| Fewer than 10 years | No State Pension entitlement |
People with an NI record before 6 April 2016 are covered by transitional calculations. Contracting out and their starting amount can mean that the simple 35-year rule does not determine their actual pension.
Simplified Example
A person whose NI record started after April 2016 and who has 28 qualifying years would receive 28/35, or 80%, of the full new State Pension. If the full rate were £200 a week, that would be £160 a week.
State Pension Age
The State Pension age is the same for men and women and depends on your date of birth:
- 66 for people born before 6 April 1960
- 67 for people born on or after 6 April 1960, phased in between 2026 and 2028
- 68 at a later date set by law and kept under review by the government
You can check your own State Pension age on the GOV.UK State Pension age calculator.
Qualifying Years and National Insurance
A qualifying year is a tax year (6 April to 5 April) in which you have paid or been credited with enough National Insurance contributions. You build qualifying years by:
Paying National Insurance Contributions
- Class 1 NI — Employees build a qualifying year when their earnings reach the Lower Earnings Limit (LEL); contributions are normally deducted only above the higher Primary Threshold
- Class 2 NI — Since 6 April 2024, self-employed people with profits at or above the Small Profits Threshold are treated as having paid Class 2 without making a payment; those with lower profits can pay Class 2 voluntarily
- Class 3 NI (voluntary) — Can fill eligible gaps in your record at a flat weekly rate
HMRC sets the LEL, the Small Profits Threshold and the Class 2 and Class 3 rates each tax year and publishes them on GOV.UK.
National Insurance Credits
NI credits are awarded automatically in certain circumstances to protect your State Pension record when you are not working or earning enough to pay contributions:
| Credit Type | Who Receives It |
|---|---|
| Child Benefit | A parent (or carer) claiming Child Benefit for a child under 12 |
| Jobseeker’s Allowance | People actively seeking work and claiming JSA |
| Employment and Support Allowance | People unable to work due to illness or disability |
| Universal Credit | People claiming UC (subject to conditions) |
| Carer’s Allowance | People caring for someone at least 35 hours per week |
| Jury service | Time spent on jury duty |
NI credits count the same as paid contributions for State Pension purposes. They are particularly important for people who take time out of employment to raise children, care for relatives, or deal with health issues.
Grandparent Credits
If the person claiming Child Benefit does not need the associated NI credit, it may be transferable to an eligible adult family member who provides childcare. These Specified Adult Childcare credits are claimed from HMRC; the conditions and application process should be checked for the relevant year.
Checking Your State Pension Forecast
You can check your State Pension forecast online at GOV.UK. The forecast shows:
- How much State Pension you are currently on track to receive
- When you can claim it
- How you might be able to increase it (e.g. by filling gaps in your NI record)
Checking your forecast regularly helps you plan your retirement income alongside any workplace pension savings.
Filling Gaps in Your NI Record
If you have gaps in your NI record, you can usually pay voluntary Class 3 contributions to fill them. Key rules:
- You can normally go back up to 6 years to fill gaps
- Special transitional rules have extended this deadline for some people (check GOV.UK for current deadlines)
- Not all gaps are worth filling — especially where the transitional calculation for a pre-2016 record means another year would not increase your pension
- A full year costs 52 weeks at the Class 3 rate; HMRC tells you the exact amount for a particular gap
It is worth checking your forecast before paying voluntary contributions to confirm that the extra year will actually increase your pension.
Deferring Your State Pension
You do not have to claim the State Pension as soon as you reach State Pension age. If you defer, your pension increases by 1% for every 9 weeks of deferral, equivalent to approximately 5.8% per year.
| Deferral Period | Pension Increase |
|---|---|
| 1 year | Approximately 5.8% |
| 2 years | Approximately 11.6% |
| 5 years | Approximately 29% |
Deferral can be beneficial if you are still working and would pay higher-rate tax on the pension income, or if you expect to live well beyond average life expectancy.
The increased pension is paid for life, so the longer you live, the more you benefit from deferral.
State Pension and Tax
The State Pension is taxable income, but it is paid gross (without tax deducted). If your total income (including State Pension, workplace pension, and any employment or self-employment income) exceeds the Personal Allowance, HMRC collects the tax through:
- Adjusting your tax code if you have other PAYE income
- Self-assessment if you are self-employed or have other untaxed income
Compare the full new State Pension with the Personal Allowance for the year: if the pension is your only taxable income and it falls below the allowance, no tax is due. When the State Pension rises faster than the Personal Allowance, the margin narrows.
State Pension for Business Owners
If you run a limited company and pay yourself a combination of salary and dividends:
- Salary at or above the LEL but no higher than the Primary Threshold — You can build a qualifying year without employee NI being deducted
- Dividends do not count towards National Insurance and do not build State Pension entitlement
- If your salary is below the LEL, you are not building qualifying years unless you receive NI credits from another source
This is a common tax planning consideration for owner-directors. Many accountants recommend setting the salary at a level that secures a qualifying year without triggering NI charges.
State Pension vs Workplace Pension
| Feature | State Pension | Workplace Pension |
|---|---|---|
| Funded by | National Insurance contributions | Employer and employee contributions |
| Amount | Based on the NI record, up to the full weekly rate | Depends on contributions and investment returns |
| Flexibility | None — fixed payment rules | Various drawdown and annuity options |
| Tax-free lump sum | No | Yes — usually 25% can be taken tax-free |
| Inheritance | Limited surviving spouse/civil partner provisions | Can be passed to beneficiaries |
| Age of access | State Pension age, which depends on date of birth | From age 55, rising to 57 from 6 April 2028 |
Most people need both the State Pension and a workplace pension (plus personal savings) to maintain their living standard in retirement.
Surviving Spouse or Civil Partner
If your spouse or civil partner dies:
- You may be able to inherit some of their additional State Pension or protected payment if they had a State Pension entitlement built up before 6 April 2016
- Under the new State Pension rules, you cannot inherit the basic new State Pension itself
- Bereavement Support Payment may be available as a separate benefit
The inheritance rules are complex and depend on when both partners reached State Pension age. Check GOV.UK or contact the Pension Service for specific guidance.