By Megan Harwood-Baynes, cost of living specialist
This week we’ve had confirmation of how much pensions will rise next April under the triple lock – 4.1%.
In reporting the news, we explained that people who reached state pension age after April 2016 would see an increase from £221.20 per week to £230.30. But anyone born before then would see their basic state pension rise from £169.50 per week to £176.45 next year.
Many readers have written in to ask why there are two different amounts. For example…
I’m 75 and my state pension is £30 per week less than the new state pension, that’s £1,500 per year less than the new pension. Why is this?
Rob
Why is there such a difference between the old state pension and the new one? My sister in law retired six months after me and gets the new one.
Bess
Who qualifies for the old state pension?
People who reached state pension age before 6 April 2016.
You need to have at least 30 years of national insurance contributions to receive the full amount. If you’re a woman born before 6 April 1950 or a man born before 6 April 1945, you may need more, so it’s a good idea to seek specialist advice.
Who qualifies for the new state pension?
People who reached state pension age after 6 April 2016.
You can claim if you have made at least 10 years of national insurance contributions and if you are a man born on or after 6 April 1951, or a woman born on or after 6 April 1953.
The amount you receive will depend on your national insurance record.
Why was the state pension changed?
Before 2016, there was a “two-tier state pension”. People could get the full basic state pension if they had paid national insurance contributions for at least 30 years, but then depending on the level of contributions, they may have been eligible to receive some “additional state pension”.
This was seen as complicated because people did not know how much they would receive until they were close to retirement.
The new system, first announced in 2014, was designed to be single-tier, calculated by just national insurance contributions and the length of time someone had paid them.
Speaking after it was announced, the then-pensions minister Steve Webb (Liberal Democrat) said: “The new state pension will be fairer to the low-paid, the self-employed and carers, and make it easier for people to understand what they will get from the state when they reach state pension age.”
Why are some people still on the old state pension system?
Those who already qualified for the old state pension at the time the reforms were brought in continue to receive it because it was not seen as possible to backdate the changes.
Will the old state pension ever be entirely abolished?
Eventually, the old state pension will be phased out, but some are calling for it to be replaced before this naturally happens.
There have been repeated petitions on the parliament website. The most recent (in May 2024) elicited the following response from the Tory government:
“The government has no plans to provide all pensioners born before 6 April 1951 with the new state pension.”
The response went on: “Comparing the headline full rates alone is misleading: this does not reflect the full position for people under each system.
“Although the systems are different, they both reflect the national insurance contributions an individual has made over their lifetimes. It is not the case that everybody who receives the new state pension will immediately receive the full rate of £221.20 per week. Nor is it the case that everyone in the pre-2016 system only receives the basic state pension.”
The government also said people generally have to wait longer under the new system.
The state pension age has been 66 since 2020 and is rising to 67 by 2028. Those who receive their state pension under the pre-2016 system will generally have received their state pension at 65 or below and therefore will receive it for more years in total.
