A lack of knowledge about state pensions is leading to pensioners receiving less state pension than expected, an expert has warned.
After the triple lock was confirmed, the state pension rose by an inflation-dampening 8.5 percent.
Since April, pensioners receiving the full new state pension will receive £221.20 per week, or £11,502.40 per year, and those receiving the full basic state pension will now receive £169.50 per week – or £8,814 per Year.
However, Standard Life, part of Phoenix Group, has highlighted the need to make information more accessible about the payments people can expect from the government later in life, as 14 per cent of pensioners receive less money than expected.
Patrick Thomson, head of research analysis and policy at Phoenix Insights, said: “Knowing how much and when you will receive from the state pension is an essential part of retirement planning and many rely on these payments to form the basis of their retirement income.
“It is worrying that a significant proportion of the population lacks understanding of this area, particularly those rapidly approaching retirement age.
“We need to close this knowledge gap so that people know what support they can get from the state in addition to additional retirement provision, such as a company pension.”
“With this complete overview, people can plan ahead and start closing savings gaps.”
Research from Standard Life found that more than a fifth (22 per cent) of pensioners said they did not know how much they would receive from the state pension when they retired, while a quarter (26 per cent) did not know how should calculate their claim.
One in ten respondents also said they did not know that their National Insurance contributions would determine the amount of state pension they would receive in retirement, and another ten percent said it was not easy to find out how much state pension they would receive later in life.
Dean Butler, managing director of retail at Standard Life, said that while the 8.5 per cent increase was a welcome boost for millions of people, concerns had been raised about its sustainability for future generations.
With this level of debate and some complex rules and terminology, it is understandable that a significant proportion of adults in the UK lack knowledge of certain details of state pensions, such as the level of their entitlements and when they are entitled to pay them .
Butler said: “The state pension makes up a significant proportion of most people’s retirement income and it is clear that greater awareness and more accessible information is needed to help people feel confident and plan their financial future.”
Phoenix Group longevity think tank Phoenix Insights found that understanding of the state pension system is low across all age groups and participants struggle to explain basic aspects of how the system works.
Over a fifth (22 percent) of people over 55 who are not yet retired do not know their statutory retirement age and only three in ten (29 percent) of this age group know what the statutory pension is.
To break down these complex ideals, Butler outlined key information about the state pension:
What is the state pension? The state pension is an amount paid out by the government every four weeks once someone reaches state pension age. However, not everyone can receive the full state pension. He said: “It may not be enough to make a living. That’s why it’s important to know how much your pension might be, when you can claim it and how it compares to your other pensions.
How high is the current statutory pension amount and what influence does social security have on it? The current full state pension amount is £221.20 per week for the 2024/2025 tax year, £11,502.40 for the year, an increase of 8.5p on the previous tax year.
Butler added: “Keep in mind that the amount you receive depends on your Social Security record and the number of years of eligibility you have. You will normally need at least ten years of eligibility on your Social Security record to receive a state pension.” You will need 35 years of eligibility to receive the new full state pension if you do not have a Social Security record before April 6, 2016.
“In certain circumstances it is possible to top up your Social Security records and your state pension forecast will indicate when this is an option.
“If you have reached statutory retirement age and have a low income, it is worth checking whether you are entitled to pension credit. This tax year (2024-25), the pension credit will normally increase your weekly income to £218.15 if you are single, or your joint weekly income to £332.95 if you have a partner.”
Some people may find that they get less than expected for their state pension
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When can I receive the state pension? Adults in the UK can currently claim the state pension from the age of 66, but this is set to rise to 67 by 2028 and again to 68 between 2037 and 2039.
Brits can use a pension calculator to check when they will reach state pension age. If you do not want to receive your state pension immediately, you can also choose to defer it. This means people could receive higher payments when they start receiving benefits, which could suit them depending on their circumstances.
How do I claim my state pension? Butler said: “You won’t get your new state pension automatically – you’ll have to apply for it. You should receive a letter at least two months before you reach state pension age, setting out what you need to do.”
Even if you have not received an invitation letter but will reach your statutory retirement age within three months, you can still submit an application, and the quickest way is online. To complete your claim you will need the following information:
- the date of your last marriage, civil partnership or divorce
- the dates of any stays or work trips abroad
- Your bank or building society details
- the invitation code from the letter to receive your state pension
When will my state pension be paid out to me? The payment date depends on the social security number, although payment may be made earlier if the normal payment day falls on a bank holiday.
Last 2 digits of NI number – payment day of the week
- 12am to 7pm – Monday
- 20 to 39 – Tuesday
- 40 to 59 – Wednesday
- 60 to 79 – Thursday
- 80 to 99 – Friday
Will the state pension be enough to finance my retirement? Butler said: “The reality is that there is a significant gap between what you get from the state pension and what you actually need or want in retirement.”
“The state pension alone doesn’t even come close to the minimum standard of living in retirement, according to the Pensions and Lifetime Savings Association (PLSA), and as it only starts in the late 60s it doesn’t help support you if you want to.” retire earlier.
“It should therefore only represent a portion of your overall retirement savings, and so it is important to understand exactly how much you may need to pay into your personal or workplace retirement savings to potentially afford the retirement you desire. To give you an idea, you can use a retirement calculator that can help you determine if you are on the right track.”