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New state pension: a guide

The new state pension comes into effect from 6 April 2016 but research has found that many savers don’t understand the changes.

A survey by Aviva found that:

  • 24% are unaware of the flat rate pension
  • 42% of 55-64 year olds aren’t sure if they’ll receive it
  • 57% know that the state pension age is increasing.

Key changes

You will get your state pension under the current rules if you have already started receiving the state pension or reach state pension age before 6 April 2016. People will be eligible for the new state pension if they are:

  • a man born after 6 April 1951 or
  • a woman born after 6 April 1953 and
  • have at least 10 qualifying years on their national insurance (NI) record.

The additional state pension (which is based on earnings) will be abolished. It will be replaced with a flat rate (or single-tier system) which is based on your NI record. You’ll need 35 years of NI contributions to receive the maximum amount of £155.65 a week. A qualifying year is a tax year in which you’ve paid or have been credited with enough NI contributions to qualify for the state pension.

How it’s calculated

The government will use your NI record to calculate your ‘starting amount’. This will be the higher of:

  • the amount you’d receive under current state pension rules
  • the amount you’d get if the new state pension had been in place when you started working.

Workers who were ‘contracted out’ of the additional state pension scheme at some point in their career may have a lower starting amount. Although the calculations are complicated, the important thing to know is that your starting amount won’t be less than under the current system.


Once you know your starting amount you can begin planning. If your starting amount is more than the full state pension, the difference is called a ‘protected payment’. It is paid in addition to your state pension and increases each year in line with inflation. If your starting amount is less than the full state pension, you can add more qualifying years to your NI record. Each qualifying year is worth £4.44 a week.

You can continue to add qualifying years until your reach state pension age or the full state pension amount. You can request a state pension statement from the government to find out how much you may receive.

Talk to us about your retirement planning.