With only two months to go until the start of the new state pension, Which? answers your questions on what the changes will mean for you.
Who qualifies for the new state pension?
People reaching state pension age on or after 6 April 2016 will qualify for the new state pension. The basic and additional state pensions will be replaced by a flat-rate, single-tier state pension.
The additional pensions and ‘contracting out’ will be abolished, and so will part of the pension credit. Qualifying National Insurance years increase from 30 to 35 years.
If you reach state pension age before 6 April 2016, these changes will not affect you.
Find out more: When will I qualify for the state pension? – use our state pension age calculator
Will I be better off under the new system?
The average state pension payment under the current system is £130 a week. Some will be better off under the new system – and others will be worse off.
The graphic shows the proportions of these, based on projections from the Department for Work and Pensions (DWP).
For example, in the period 2016-2020, some 51% of men who get the state pension for the first time will be better off, but 28% will be worse off (21% will get about the same – shown as amber).
People in the following groups will generally be better off under the new system:
- women, carers and the low-paid who haven’t built up additional state pension
- self-employed people who didn’t qualify for state second pension
- people who were contracted out and can access their private pensions at age 55
- workers contracted out who have time to build up years of full National Insurance (NI) contributions.
The following groups will generally be worse off, or no better off, under the new system:
- people with less than 10 years of NI qualifying years
- people with more than 35 years’ worth of full NI contributions
- high-earners who won’t be able to build up more additional state pension (ASP)
- younger employees who will no longer be able to build up ASP
- spouses, civil partners, widows and widowers who will no longer be able to claim or inherit a state pension based on a partner’s NI contributions
- those already drawing the state pension won’t be affected.
How much state pension will I get?
The amount of state pension you get will change for those qualifying for it on or after 6 April 2016. The basic and additional state pensions are going to be replaced by a flat-rate, single-tier state pension, with a full level of £155.65 in April 2016.
People might get more or less than the indicated full new state pension (eg their starting amount). Those who have built up a certain amount of additional state pension will get a higher amount, while those who were contracted out before 6 April 2016 for a significant time will probably get less.
If you receive the state pension under the old system, the basic state pension is worth £115.95 a week for a single person in 2015/16, going up to £119.30 from April 2016.
Find out more: How much state pension will I get? – our short video explains all
What determines whether you’re better off under the new state pension?
The new system will favour those with lots of qualifying years or credits, but little additional state pension, in the early period.
People in their 50s and 60s will be the main beneficiaries, with 75% of those qualifying for the state pension set to gain in the first 15 years.
Some 3m women will receive an average of £11 more per week by 2030 as a result of the changes.
The longer-term situation will change, with the majority of younger workers in their 20s, 30s and early 40s being worse off.
DWP figures show that 53% of current 43-year-olds will get a lower state pension when they qualify for it in 2040, rising to 76% for 24-year-olds who are due to reach state pension age in 2060.
The overall bill for the government will reduce to combat the fact that the population is ageing. More people will gradually get less under the flat-rate system compared to what they’d have got under the current rules.
- State pension explained – our comprehensive guide to the state pension
- The new state pension – all the changes detailed in our guide
- Income options for your pension under the 2015 rules – pension freedoms explained