How is the state pension calculated?

Navigating the complexities of the State Pension can often feel overwhelming. With changes to the system over the years and various criteria affecting how much you’re entitled to, understanding the basis of your State Pension calculation is crucial.

At Spencer Churchill Claims Advice, we’re dedicated to providing clear, trustworthy advice. That’s why we’ve gathered all the information you need to calculate your State Pension, ensuring you’re fully prepared for your golden years.

This guide covers:

• Your State Pension – The Basics
• Qualifying Years and Contributions
• State Pension Calculations – Other Things To Think About
• How Can I Check My State Pension?
• Protecting Your Pension With Spencer Churchill Claims Advice

Your state pension – the basics

The State Pension is a foundation for your retirement income, provided by the government. It’s based on your National Insurance (NI) record over your working life. However, the calculation varies significantly depending on when you were born and how many qualifying years of NI contributions you have.

Qualifying years and contributions

For those who reached state pension age before 6 April 2016

If you reached State Pension age before 6 April 2016, you’re part of the “old” State Pension scheme. Here, the full basic State Pension is £156.20 per week for the 2023-24 tax year.

The amount you receive depends on your qualifying years of National Insurance contributions. Men needed 44 years, and women required 39 years for the total amount before this date. If you have fewer years, you’ll receive a proportionately smaller pension.

For those reaching state pension age after 6 April 2016

For individuals reaching the State Pension age after 6 April 2016, the “new” State Pension rules apply

The new State Pension rate is £203.85 per week for the 2023-24 tax year, increasing to £221.20 per week from April 2024. You need 35 qualifying years of NI contributions to qualify for the total amount. If you have between 10 and 34 years, you’ll receive a portion of the full amount. Less than 10 years means you generally won’t be eligible for the State Pension.

State pension calculations – other things to think about

Some other things impact how your specific State Pension is calculated. These include:

Contracted out

If you’ve been “contracted out” of the Additional State Pension during your working life, your State Pension amount might be affected. Contracting out meant paying lower National Insurance contributions and accumulating less or no Additional State Pension, affecting the final calculation of your State Pension.

Deferring your state pension

You also have the option to defer your State Pension, which can increase the amount you receive. The increase depends on how long you defer and when you reach State Pension age.

How can I check my state pension?

You can get a State Pension forecast online or through the post, giving you an estimate based on your current National Insurance record. This forecast can help you understand how much you’re likely to receive, allowing you to plan your retirement more effectively.

Protecting your pension with Spencer Churchill Claims Advice

Understanding your state pension and making sure you’re on track for a comfortable retirement can get confusing. With twists and turns at every corner – qualifying years, contributions, and the ever-looming question of “Am I doing this right?” – it’s understandable to feel a tad overwhelmed. But, as soon as you know, you’ve got the groundwork in place for enjoying your golden years to their fullest.

We get it – your pension isn’t just a number; it’s the hard-earned reward for your years of dedication, a cornerstone of your dreams for a serene and fulfilling retirement.

If there’s a nagging doubt in your mind about how your pension pot has been handled, or if you’re worried that you’ve been mis-sold a pension, we’re here to help.

Our team has helped thousands of people get back what is rightfully theirs, and we will do everything we can to make sure your hard-earned money is in your pocket, where it belongs.

Share your concerns, your questions, and even your retirement dreams with us. Together, we’ll ensure your pension is everything it should be, paving the way for the retirement you’ve imagined. After all, it’s not just about securing a financial future—it’s about creating peace of mind today. Give our friendly team a call on 01204 929929, and let’s add some clarity to your retirement plans.