Everyone will reach a point where they stop working and retire from employment. In the UK, the government body known as the Department for Work and Pensions runs the state pension scheme. For people approaching the milestone, it will be important to know their pension entitlement to plan for their later years, as they will be without the assistance of a salaried job or other means of earning. Keep reading to find out more about the New State Pension scheme and the requirements you need to meet to file your application.
What Is The New State Pension?
The government pension plan currently in operation in the UK is called the New State Pension. It came into operation on 06 April 2016. The previous pension plan was known as the Basic State Pension.
Does Tax Need To Be Paid On State Pension UK?
The new State Pension is tax-free. However, if people have other sources of income in addition to the new State Pension, taxes becomes a consideration. If the total income (including the new State Pension) exceeds their personal allowance, income tax payments are required. Currently, the personal allowance is £12,570.
Eligibility and Requirements
Currently, anyone aged 66 years old or over is eligible for the New State Pension. From 6 May 2026, the eligibility age will increase to 67 because of population growth and the fact that people are now living longer.
Besides this age requirement, a minimum of 10 qualifying years on the National Insurance record is needed to receive any payments from the new State Pension. A qualifying year is built if a person is employed and earning more than £190 a week. The person needs to earn from one employer along with National Insurance contributions. However, there’s no need for the 10 years to run consecutively.
People without a National Insurance record before 6 April 2016 will need 35 qualifying years to receive the full state pension UK.
To qualify for the New State Pension, at least one of the following is required:
- National Insurance contribution payments through employment
- Receiving National Insurance credits for reasons such as unemployment or sickness
- Voluntary National Insurance payment contributions
An individual can work towards reaching the maximum New State Pension until one of the following occurs first:
- The full New State Pension amount is achieved
- They reach the State Pension age and retire from work
State Pension UK For The Self-Employed
From the beginning of 6 April 2016, Class 2 National Insurance contributions made by self-employed people were treated exactly as employee contributions. It counts towards the new State Pension identical to everyone else’s, including those Class 2 payments made before 6 April 2016. These contributions ensure people working outside the scope as an employee will also receive pensions at the retirement age.
How Is Your New State Pension Amount Calculated?
The current full New State Pension per week is £185.15, but because payments are calculated using several factors, not everyone receives the same amount. A person’s National Insurance record before 6 April 2016 forms the basis of calculating their new State Pension. Using the National Insurance record, the new State Pension is the higher amount of either:
- The amount a person should receive under the Old State Pension rules (it takes into account basic State Pension together with Additional State Pension)
- The New State Pension amount on record to 06 April 2016, assuming the scheme ran throughout their working career
Gain an idea of your new State Pension by visiting the UK government website. It will ask you to enter personal information, such as the National Insurance Number, to indicate entitlement.
How To Receive The Full State Pension?
Payment of the state pension UK is not automatic. Before reaching the State Pension age, a letter is sent by the Department for Work and Pensions to the recipient advising them how to proceed with the claim. People are advised to claim if the government fails to make contact. The quickest way to claim is online through the gov.uk website. Details on how to contact the Department for Work and Pensions by telephone to receive an application are listed here.
Why Do Some People Fail To Receive The Full New State Pension?
Some people don’t qualify for the full state pension UK amount due to a lack of National Insurance contribution. Luckily there’s a remedy. Adding further qualifying years to their National Insurance record from 5 April 2016 makes it possible to reach the full entitlement.
For those catching up, each qualifying year after 5 April 2016 adds £5.29 a week to the expected state pension UK. £5.29 is calculated by dividing £185.15 (the full new State pension) by 35 (the required number of qualifying years).
To calculate the current New State Pension know that the £5.29 is multiplied by the total number of qualifying years achieved after 5 April 2016. This is added to their new State Pension entitlement on 06 April 2016.
Is It Possible to Receive More Than The Full New State Pension?
A person can receive more than the full State pension for two reasons:
- They chose to delay taking their State Pension
- They had an Additional State Pension, which is extra money for those who also qualified for a basic State Pension (the pension plan which existed before the New State Pension came into existence in 2016)
Documentation, Cost, and Processing Time
The following information is required to apply:
- The date of the person’s most recent marriage, civil partnership, or divorce
- The dates of the times spent living or working abroad
- Bank or building society details
- Invitation code from the State Pension letter
No costs are involved in registering for the New State Pension; it’s entirely free. Because the processing time varies, applying 4 months before the pension age is advisable to ensure prompt payment. The pension is paid every 4 weeks into the recipient’s bank account, and the receiver can expect to receive the allowance until the end of their life. The first payment is within 5 weeks of reaching the State Pension age, with a full payment every 4 weeks after that.
Finishing Off
Moving into the senior years, the new State Pension is there to provide an income and assist people. This article has outlined how the state pension UK works and how people can claim their full entitlement. We hope you now know everything you need to start your application process.
