Which of the Two Types of UK State Pension Will You Receive?
Published / Last Updated on 07/10/2025
You may or may not be aware of the two types of UK State Pension. What you receive will depend upon when you reached state pension age and what you have built up in National Insurance Credits. But first let’s look at a brief history of the UK State Pension.
For Full History see: “History of Poor Laws, State Pensions, Contracting Out and GMPs” - State Pensions and GMPs
1909 - The first non-contributory (i.e., no payments in), means tested (income below £21 per year) state pension started under the Old Age Pensions Act 1908. From Age 70, it was 5 shillings a week (equivalent to around £20 per week today).
1925 - Contributory Pensions Act started a contributions-based state pension for all manual workers earning £250 per year of more. Payable from age 65-70 and in addition to widows and orphans.
1946-48 - The National Insurance Act 1946 introduced benefits such as unemployment, sickness, maternity, widows, guardians’ allowance, death grants, and child benefit, closely followed by the National Assistance Act 1948 that introduced the ‘old age’ basic state pension system as we know it today. This was not means tested but was based upon social security contributions and remains so to this day.
1961-75 – A Second State Pension - The National Insurance Act 1959 introduced a 2nd tier state pension on top of the old age pension based upon national insurance contributions from 1961. This was called the State Graduated Pension.
Originally, the Basic State Pension was based upon a minimum level of 44 years NI credits/contributions for men and 39 years NI credits/contributions for women. This eventually moved to needing just 30 years credits for all in its latter years.
Two Tiers of State Pension: From 1961, most people started to accumulate two state pensions: the ‘old age’ basic state pension plus a graduated pension (subsequently amended and replaced as follows:
1978 – The Social Security Act 1975 replaced the 2nd tier graduated scheme with the State Earnings Related Pension Scheme (SERPS). 1.25% of your ‘band earnings’ was paid in National Insurance Contributions on earnings between a lower earnings limit (LEL) and an upper earnings limit (UEL) set by the Government. UEL and LELs are still used today to set what national insurance contributions both you and employers pay. Assuming you had a full MIC record, SERPS was targeted to pay you an additional pension (on top of the Old Age/Basic State Pension) of 25% of your final Band Earnings.
1986-2016 – The government realised that SERPS was unaffordable for the State, as the state carried all the inflation protection increase costs and started to amend it with the Social Security Act 1986, and various Pensions Acts. SERPS ‘morphed’ over the years with certain inflation protection costs passed onto employers pensions that had contracted out of SERPS, as well as reducing to just 20% of your lifetime average ‘band earnings’ (clearly much lower in 1978 compared to the 1980s and 1990s, ultimately with the changes, came a name change from 2002-2016 to the State Second Pension (S2P).
2016 – To great ‘fanfare’, the government introduced the New State Pension (replacing both the old age Basic State Pensions and the 2nd tier Graduated/SERPS/S2P regime). The headlines were that they were increasing the state pension massively for all, but they did not highlight that we were also losing the 2nd tier ‘state’ pensions system.
In addition, for a full New State Pension you must accrue 35 years NI credits rather than previously 30 years credits for the ‘old age’ Basic State Pension.
- For those that reached state pension age before 06/04/2016, you remained on the old-style Basic State Pension plus the 2nd tier Graduated/SERPS/S2P regime known as the Additional State Pension.
- For those that reached state pension age after 06/04/2016, the Department for Work and Pensions carries out a test to see if you are better off under the old-style Basic State Pension plus the 2nd tier Graduated/SERPS/S2P regime (Additional State Pension) or the New State Pension. You receive the higher of the two systems, the old system ‘Protected Amount’ or new State Pension.
- As time has moved on and with less people having 2nd tier credits from the 1960s-2000s, some people in their 60s will get higher combined state pensions under the old system’s protection but most people in their 50s and below should now receive the New State Pension when they reach state pension age.
Current Full ‘Old Age’ Basic State Pension Rates:
- Tax Year 2025/26 £176.45 per week + SERPS/S2P Additional Pension (e.g. Say your Average Band Earnings were £300 per week at 20%, 2nd Tier pension = £50 per week) Total £226.45 per week.
- Tax Year 2026/27 £184.75 per week + SERPS/S2P Additional Pension (e.g. Say your Average Band Earnings will be £315 per week at 20%, 2nd Tier pension = £63 per week). Total £247.75 per week.
Current Full New State Pension Rates:
- Tax Year 2025/26 £230.25 per week.
- Tax Year 2026/27 £241.25 per week.
