UK State Pensions
The UK State Pension is a regular income from the government that provides financial support when you retire. Read our UK State Pension guide to learn more
Speak to a pension specialistThe UK State Pension provides a vital foundation for your retirement income.
The regular payment from the government can be used to supplement the cost of retirement alongside your other sources of income, such as personal pensions.
This guide will take an in-depth look at the UK State Pension and answer some frequently asked questions.
Quick links
- What is the UK State Pension?
- How much UK State Pension do you get?
- Triple lock explained
- Can I boost my State Pension?
- Can you claim the UK State Pension if you live overseas?
- Do you pay tax on the UK State Pension?
- How to check your UK State Pension entitlement
- What is the UK State Pension age?
- Planning for the future with Holborn Assets
What is the UK State Pension?
The UK State Pension is a regular payment made by the government once you reach a certain age.
To be eligible for the State Pension, you will need a minimum of 10 years of National Insurance contributions (NICs) and 35 years to receive the maximum amount.
On its own, the State Pension is unlikely to provide enough retirement income to support you financially when you stop working.
However, it can go some way to covering essential expenses such as general costs of living. It can also help supplement income, such as personal pensions or passive income sources.
How much UK State Pension do you get?
Your State Pension entitlement and how much you get depends on the number of ‘qualifying years’ you have on your National Insurance (NI) record. You build up qualifying years through National Insurance contributions (NICs).
The State Pension rules changed on 6 April 2016. As part of these changes, you can no longer build up additional State Pension like you could as part of the basic State Pension.
Under the new State Pension rules, you need:
- At least 10 qualifying years to get any UK State Pension
- 35 qualifying years to receive the maximum amount
The full new State Pension for 2023/24 is £203.85 a week, while the minimum (10 qualifying years) is £58.24 a week.
Once you reach the minimum 10-year requirement, each additional qualifying year adds 1/35th of the full amount to your pension income.
Here are some examples:
- 25 qualifying years: 25/35 x £203.85 = £145.60 a week
- 20 qualifying years: 20/35 x £203.85 = £116.48 a week
- 15 qualifying years: 15/35 x £203.85 = £87.36 a week
Triple lock explained
The UK government created a policy to ensure that the State Pension has some protection from increasing rates of inflation. This is called the pension triple lock.
The triple lock ensures that the State Pension increases each year using three measures. The State Pension then rises by whichever measure is the highest.
The three measures are:
- Average earnings
- A measure of inflation using the Consumer Prices Index (CPI)
- 2.5%
Here are some examples to illustrate how the triple lock works.
If average earnings increased by 3% and inflation increased by 4%, the State Pension would increase by 4%. That is because inflation is higher than average earnings and the flat rate of 2.5%.
However, if both average earnings and inflation were at 2%, the State Pension would increase by 2.5% as both other measures are lower than the 2.5% flat rate. In this example, you would have more spending power as the State Pension increase would beat inflation.
Can I boost my State Pension?
The new State Pension is based on your National Insurance (NI) contribution record. In other words, the number of qualifying years you have by the time you reach the State Pension age.
Gaps on your NI record could reduce the value of your State Pension pot or mean you are not eligible. By making voluntary contributions, you can fill in those gaps and ensure you have sufficient qualifying years on your NI record.
This is especially useful for expats who often have gaps as a result of not paying NI while working overseas.
Another option that may allow you to boost your retirement income is to delay taking your State Pension.
The value of the UK State Pension increases by 1% for every nine weeks it’s deferred. By deferring your pension for two years, it would increase by over 11%.
Can you claim the UK State Pension if you live overseas?
The UK State Pension is based on your National Insurance record.
As long as you have sufficient qualifying years on your record, you can claim your State Pension in most countries. It can be paid into a UK or local bank account.
Those who retire overseas may not benefit from the pension triple lock. Annual increases to the State Pension only apply if you live in:
- The European Economic Area (EEA)
- Gibraltar
- Switzerland
- Countries that have a social security agreement with the UK – not including Canada or New Zealand
Do you pay tax on the UK State Pension?
The UK State Pension is liable for Income Tax but is paid to you before any tax is deducted.
Income Tax is only paid pension savings if your total annual income exceeds your Personal Allowance, currently £12,570. Income Tax does not typically apply to any income below this amount.
In 2023-24, the current full level of new State Pension is £10,600 a year – £1,970 less than the annual Personal Allowance. This means if your State Pension was your only source of income, you would not pay Income Tax.
However, your total annual income includes more than just your State Pension. According to the UK government, your total income could consist of the following:
- The State Pension (either the basic State Pension or the new State Pension)
- A private pension – this includes workplace pensions, personal and stakeholder pensions
- Any taxable state benefits
- Earnings from employment or self-employment
- Any other income, such as money from property, savings or investments etc.
To learn more, read our pension tax guide.
How to check your UK State Pension entitlement
You can see how much you are likely to get by getting a State Pension forecast online.
Using this online service, you can get an estimate of the following:
- How much you could get
- When you can claim
- Ways to increase your entitlement
Your State Pension forecast amount is based on your current NI contributions record, and what it could be once you reach State Pension age.
You can also check your NI record online to see:
- Any gaps that mean some years do not count towards your State Pension
- If you can make voluntary contributions and how much this will cost
Unlike a State Pension forecast, your NI record does not show how much State Pension you are likely to receive.
What is the UK State Pension age?
You can access personal pension schemes such as a workplace pension plan from age 55 (57 from April 2028), but the UK State Pension is different.
The official state pension age is currently 66 for both men and women. However, the State Pension age is set to rise to 67 between 2026 and 2028 and 68 between 2044 and 2046.
Your State Pension age could be between 60 and 66 if you were born before 6 October 1954, depending on your birth date and whether you are a man or a woman.
You can use the government’s State Pension age calculator to find out when you can claim yours.
Planning for the future with Holborn Assets
The UK State Pension is an important source of income in retirement. However, it alone is unlikely to be enough.
Based on research by the Pensions and Lifetime Savings Association (PLSA), a single person will need around £37,000 a year for a comfortable retirement lifestyle.
In contrast, the UK State Pension currently provides just over £10,600 a year, which is unlikely enough to support most financially. This highlights the importance of having some additional sources of revenue in place.
If you want to better understand your retirement options and how to plan, we can help.
At Holborn Assets, we provide independent, expert advice on pension planning to help you reach your retirement goals.
Our specialists also offer a range of retirement planning services to help you build financial security and better prepare for your golden years. And rather than taking a one-size-fits-all approach, we tailor our strategies and advice to your needs and goals.
Start your retirement planning today with Holborn Assets. Book a free, no-obligation meeting today and learn how we can help you.
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