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How Much is a Full State Pension?

How much is a Full State Pension?

Retirement planning is a journey that requires careful consideration of various factors, and at the heart of this planning lies the UK State Pension.

Understanding the ins and outs of the State Pension, including the question of how much one can expect, is crucial for anyone approaching their older years. For more information, read on!


What Is The UK State Pension?

The UK State Pension is a regular payment made by the government to individuals who have reached the eligible age and have contributed through National Insurance (NI) contributions during their working life.

There are different types of state pensions available, including basic and full state pensions. To be eligible for the full State Pension starting amount, you must have a minimum number of qualifying NI years on your record.


How to Qualify for the Full State Pension

To qualify for the full amount of State Pension, you generally need 35 qualifying years of National Insurance contributions.

Qualifying years are tax years in which you have paid sufficient National Insurance contributions or received credits, for example, if you were unemployed or claiming certain benefits.

It’s important to note that the qualifying criteria may differ if you were contracted out of the additional State Pension at any point during your career, which was common for individuals in defined benefit pension schemes.


What is The Basic State Pension?

The full State Pension amount consists of two components: the Basic State Pension and the Additional State Pension. The Basic State Pension provides a foundation for your retirement income. The full Basic State Pension for a single person is £156.20 per week.

However, the actual amount you receive might be more or less than this, depending on your NI contribution record.

If you have fewer than 35 qualifying years, your Basic State Pension will be reduced. Conversely, if you have more than 35 qualifying years, you may be entitled to an enhanced Basic State Pension.


What is The Additional State Pension?

The Additional State Pension, sometimes referred to as the State Second Pension (S2P) or SERPS (State Earnings-Related Pension Scheme), is an additional amount based on your earnings and National Insurance contributions during your working years.

However, the Additional State Pension is being phased out. Individuals who reached the State Pension age after April 6, 2016, receive the new State Pension, which combines the basic and additional State Pensions into a single payment.


What About The New State Pension?

The full new State Pension is £203.85 per week. This amount is not dependent on the Additional State Pension and is based on having 35 qualifying years of National Insurance contributions.

As with the Basic State Pension, the actual amount you receive may be more or less than the full new State Pension depending on your NI contributions record. If you have gaps in your National Insurance record, you may be able to fill them by making voluntary contributions.


Contracting Out

If you were part of a workplace pension scheme that was contracted out of the Additional State Pension, you and your employer paid lower National Insurance contributions.

In return, you built up entitlement to a workplace or private pension that would replace some or all of the Additional State Pension.

As a result, individuals who were contracted out may receive a lower new State Pension. The deduction is known as the Contracted Out Pension Equivalent (COPE), and it represents the amount that would have been paid into the Additional State Pension had you not been contracted out.


Individual Circumstances Matter

Calculating your State Pension can be complex, as individual circumstances vary. Factors such as periods of unemployment, self-employment, or caring responsibilities can influence your National Insurance record.

We advise you to check your National Insurance contributions record regularly, especially if you’ve had breaks in your career.

In addition, factors like delaying your State Pension can affect the amount you receive. If you delay taking your State pension, you may receive additional payments when you do start claiming. This will have to be paid on top of the full state pension.

It is important that you keep on top of your payments, especially State Pension payments. This can be done through basic bookkeeping.


What Age Can You Claim Your State Pension?

The age at which you can claim your State Pension is another crucial aspect to consider. The State Pension age is gradually increasing, and it is linked to life expectancy.

The government periodically reviews the State Pension age to ensure it remains fair and reflects changes in life expectancy.

Currently, the State Pension age is 66 for both men and women, but it is set to increase further in the coming years. It’s essential to check your specific State Pension age as it may differ based on your date of birth.


How To Claim Your State Pension

As you approach State Pension age, you will receive a letter from the government informing you about when and how to claim your State Pension.
It’s advisable to claim your State Pension even if you continue working, as delaying the claim can increase your weekly payments.

The process of claiming your State Pension is straightforward, and you can typically claim it online, by phone, or by completing a claim form sent to you by post. Make sure to have your National Insurance number and other relevant information on hand when making your claim.


Other Pension Considerations

While the State Pension forms a vital part of retirement income, it’s often not sufficient to cover all your expenses in later life.

Exploring additional pension options, such as workplace pensions, private pensions, or personal savings, can help you build a more comprehensive retirement plan.

Workplace pensions, in particular, are a valuable asset, with contributions from both you and your employer. Many employers offer pension schemes, and it’s crucial to actively engage with these schemes to maximise your retirement savings.


Contact LJS Accounting To Stay on Top of Your State Pension Payments

The amount you receive depends on various factors, including your National Insurance contributions record, whether you were contracted out, and the State Pension scheme under which you fall.

Understanding these factors, staying informed about changes in State Pension policy, and actively managing your pension contributions are essential steps in securing a stable and comfortable retirement.

While the State Pension provides a foundation, complementing it with additional pension arrangements and savings can contribute to a more financially secure and enjoyable retirement journey.

Here at LJS Accounting, we offer personal tax services to ensure you stay on top of your records.

This is ideal for those interested in a state pension. As briefly mentioned before, it is important to stay on top of your payments rather than delaying them, as this can affect the amount you receive.

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