State Pension: What You Need to Know

The State Pension is a cornerstone of retirement planning, providing a guaranteed income to support you in later life. In Episode 7 of the Retire Well with Wealth of Advice podcast, Chartered Financial Planners Joe and Matthew explain how the State Pension works, who is eligible, and practical steps to maximise your entitlement.

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How Much is the State Pension?

The New State Pension (Post-2016) currently stands at £11,502 per year.

The UK Government’s triple lock guarantees that the State Pension rises each April by the highest of: earnings growth, price inflation, or 2.5%. For April 2025, this means that the State Pension will rise to:

• New State Pension: £230.25 per week (approximately £11,973 per year)
• Basic State Pension: £176.45 per week (approximately £9,175 per year)

If you have additional State Pension entitlement from SERPS or S2P (State Second Pension), these amounts increased by 1.7% for the same period.

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When Will I Receive the State Pension?

The current State Pension Age depends on your date of birth:

• Currently: 66
• Rising to 67 by 2028
• Rising to 68 between 2044 and 2046 for those under 46

You can check your individual age using the State Pension Age Calculator.

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How to Qualify for the State Pension

Eligibility depends on your National Insurance record:

• New State Pension (post-April 2016): minimum 10 qualifying years for any entitlement, 35 qualifying years for the full award
• Old State Pension (pre-April 2016): up to 30 qualifying years for a full award

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National Insurance Credits

National Insurance credits can help fill gaps in your record to ensure you qualify for the State Pension. Credits are awarded automatically in certain circumstances or can sometimes be claimed. Common ways to receive NI credits include:

• Caring for children: Main carers of a child under 12 may automatically receive credits
• Caring for adults: Looking after a disabled person for 20+ hours per week can earn credits
• Receiving certain benefits: While claiming Jobseeker’s Allowance, Employment and Support Allowance, or Incapacity Benefit, you may get credits
• Carers’ Allowance: If entitled, NI credits are added to your record
• Voluntary credits: If you were unemployed, studying, or caring without automatic credits, you may be able to claim credits to fill gaps

Credits are particularly important for those without continuous employment or full-time work, helping ensure you meet the minimum qualifying years for the State Pension.

If you have gaps in your National Insurance record, you can also buy extra years at a cost of £907.40 per year, which can significantly increase your State Pension entitlement.

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Deferring the State Pension

If you do not claim your State Pension at your State Pension Age, you can defer it.

• For every 9 weeks deferred, you receive an extra 1%
• Deferring for a full year increases your weekly payment by £12.83

Deferring may be beneficial if you expect other retirement income, wish to increase guaranteed income later, or plan to retire later than your State Pension Age.

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Retirement Myth

Many people believe the State Pension is tax-free or means-tested.

• The State Pension is taxable income and must be declared on a self-assessment or through PAYE
• It is not means-tested, so the amount you receive does not reduce based on your other income or savings

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Final Thoughts

The State Pension forms a vital part of your retirement income, providing a predictable base on which to build your lifestyle. Understanding how much you are likely to receive, how to qualify, and options for deferral can help you plan more effectively.

Wealth of Advice can guide you through your National Insurance record, help fill gaps, and ensure your State Pension strategy complements your wider retirement planning. Explore our free guides, blog posts, and tools to take control of your retirement income today.

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