My State Pension is Lower or Higher than the Full State Pension?
Published / Last Updated on 20/02/2024
You are entitled to a full UK state pension if you have 35 years qualifying National Insurance Contributions (NIC) or credits when not ‘working’ e.g., home responsibilities protection for childcare (you/your partner must be in receipt of child benefit) or looking after someone for 35 hrs per week with long term disability or illness (the person you are caring for must be in receipt of attendance allowance, disability living allowance {middle or highest rate for personal care} or constant attendance allowance.
Full UK State Pension for tax year 2023/24 is £203.85 per week (£815.40 every 4 weeks) and for 2024/25 it is £221.20 per week (£884.80 every 4 weeks).
Why Is My State Pension Lower Than the Full State Pension?
- Reason 1 – you do not have 35 years NIC qualifying credits.
- Reason 2 – we used to have a 2-tier state pension system with 1st tier being the Basic State Pension and 2nd tier being a secondary state pension. If your new state pension is lower than the full state pension, you likely were ‘contracted out’ of the old ‘2nd tier’ State Earnings Related Pension Scheme (SERPS) or the later State Second Pension (S2P). During that time you paid less NIC as did your employer to the state and some of your NICs were paid into your contracted our personal pension or more usually, company pension. In return your works pension makes up the difference.
You may improve your state pension by either paying voluntary NIC or getting/claiming NI credits not yet added.
Why is My State Pension Higher Than the Full State Pension?
- The 2-tier basic state pension and 2nd state pension were replaced by the New State Pension in 2016. During your working life, you may have built up full entitlement to the old basic state pension in addition to being ‘contracted in’ to the 2nd tier State Earnings Related Pension Scheme (SERPS) or the later State Second Pension (S2P). During that time, you paid full NIC as did your employer to the state for both tiers of state pension.
- When you reach state pension age, the Department for Work and Pensions (DWP) does a calculation to see whether you have built up higher state pension credits via the old 2-tier system or the new single tier (but higher) State Pension.
- If you have built up a higher entitlement under the old basic state pension rules, your new state pension 'starting amount' is called your 'protected payment'.
If you are not sure, you should read your old workplace or personal pension documentation and look for terms like ‘contracted out’ or ‘guaranteed minimum pension GMP’ or even ‘protected rights’, as this will indicate that you were contracted out of SERPS and/or S2P. You should also check with the DWP.
