What Is The Difference Between The Full State Pension And The Basic State Pension


The state pension increases yearly, often following the triple lock guarantee. This affects the total amount of income to which you are entitled.

There will also be an increase in the minimum age at which one may begin collecting their state pension during the next several years. When retiring, your history of receiving national insurance will determine how much you will get when you do so.

In this post, we will explain state pensions, including the difference between full and basic state pensions.

What Is The State Pension?

The State Pension is a government-provided monthly pension for persons who have achieved State Pension Age.

The receipt of this income is contingent upon the recipient having received sufficient National Insurance credits or made sufficient qualifying payments to the National Insurance system.

State Pension
State Pension

What Is The Difference Between The Full State Pension And The Basic State Pension

The state pension was altered on April 6th, 2016, to establish a more straightforward one-tier structure.

Under the terms of the new programme, everybody who attained the age requirement for the state pension after this particular day will be eligible for an income.

New Full State Pension

This pertains to those who will achieve the age requirement for the state pension on or after April 6th, 2016. Those born on or after April 6th, 1951, are eligible, as are those born on or after April 6th, 1953.

  • In 2022/23, the single-tier, total state pension amount will be set at £185.15 per week.
  • To get this amount, contributions to national insurance must be made for 35 years.
  • For any benefit from the National Insurance system, you must have at least ten years of experience.

Old Basic State Pension

This pertains to anyone who attained the age requirement for receiving a state pension before April 6th, 2016.

  • A full basic pension comes out to 141.85 pounds a week.
  • You must have paid into national insurance for thirty years for this sum.
  • For any period shorter than thirty years, you will get one-thirtieth of the total amount for each year contributions are made.
  • Depending on how much you earned and whether or not you received certain benefits, you can be entitled to a supplement in the form of a supplementary state pension. These factors will determine your eligibility.

How Much Is The New State Pension?

From the 6th of April 2022 forward, the maximum value of the flat-rate pension will be set at £185.15 per week.

If you had made National Insurance payments or received credits before the 6th of April, 2016, the amount of State Pension you get might be less than the new maximum or more than the new maximum.

If you already have a National Insurance record, a calculation will be done to establish the beginning amount so that you may begin contributing to the program.

This will compare the entitlements built up to this point under the previous State Pension with those built up under the new State Pension. Your foundation beginning amount for the new State Pension will be determined by whichever of these two numbers is more excellent.

You will notice that a reduction has been made from the beginning amount if you were engaged in contractual out-employment at any point before the 6th of April, 2016.

This deduction will take place automatically. This is because you will often have made National Insurance payments at a lower rate than when you were a member of a contracted-out pension plan. As a result, you will be eligible for a higher payout from your pension.

If your starting amount is less than £185.15 a week, you can build up more State Pension for further qualifying years.

Qualifying years are years in which you pay or receive National Insurance contributions/credits beginning the 6th of April, 2022, and continuing until you reach State Pension Age.

If your starting amount is less than £185.15 a week, you can build up more State Pension for further qualifying years.

What Happens To My Partner’s Pension After Death?

If you are left a widow, you may be eligible to inherit the state pension entitlement of a deceased husband or civil partner. A surviving spouse or civil partner could inherit the state pension of their deceased partner if the deceased partner were receiving the state pension at the time of their death.

The Department of Work and Pensions (DWP) will do an automated calculation to determine whether or not a widow would benefit more from receiving their deceased spouse’s pension and would then, in effect, switch the widow’s entitlement to the more generous one.

If you are qualified for a portion of your partner’s state pension income, the Department of Work and Pensions (DWP) will increase this amount automatically; you do not need to apply.

Can I Work And Get A State Pension?

To answer your question, yes, you may continue to work full-time or part-time, or you can perform freelance work and still collect the pension. You can postpone receiving your state pension if you want to continue working for as long as possible.

In this manner, you will be able to increase the amount you get each week even after you have stopped working.

If you reach the age to receive a pension after April 2016, your weekly payout will increase by 1% every nine weeks you wait to receive it.

Your state pension will grow by an amount equal to 1% every five weeks you wait to receive it before April 2016, as long as you defer receiving it for a minimum of five weeks.

This calculates out to 10.4% each year that the payment is delayed.

Keep in mind that if you continue to work after you reach retirement age, you will no longer be required to pay national insurance payments on your salary. On the other hand, depending on how much money you make, you may have to pay taxes on your monthly state pension.

How To Increase State Pension?

Some believe that contributing more money to their pension funds is the most effective way to guarantee they will have the required level of savings.

You can accomplish this goal by either establishing a new pension plan or contributing more funds to the ones you already have. The following are some ways to increase the amount of money in your pension pot.

Pay hikes

One straightforward piece of advice that might facilitate your savings is to transfer a part of all salary increases you get throughout your working life into your pension.

Regular payments ceasing

Let’s imagine you’ve finally gotten rid of the auto loan you had to take out to purchase a vehicle.

You can reinvest part or all of the money received from those payments into your pension plan rather than putting it back into your spending budget.

Maximize your state pension

To be eligible for the full state pension, you must have worked for 35 years.

The good news is that if you cannot work because of things like raising children or health concerns, you may “buy back years” by making a voluntary payment to your national insurance. This contribution is tax deductible.

In most cases, the payments must be paid within six years of the day they were skipped; however, there are exceptions to this rule.

The cost of each ‘year’ will vary depending on the specifics of your situation. You can discover further information on voluntary payments to National Insurance on the government website.

Examine your investing options

How your pension is invested significantly impacts the amount you will receive when you reach retirement age.

For instance, if your plan has a “default” investment choice – your money is automatically invested when you join the scheme – it is possible that this option is not best suited for you. It is thus essential to investigate the investment fund or funds in which your money is now held.

Frequently Asked Questions

  1. Is the Full State Pension enough to live comfortably?
    • Yes, for many individuals, the Full State Pension provides a solid foundation for a comfortable retirement.
  2. When can I start claiming my State Pension?
    • The age for claiming State Pension varies, but it’s typically around your state pension age. Check with the official authorities for precise details.
  3. Can I enhance my State Pension with additional contributions?
    • Yes, contributing more during your working years can enhance your State Pension. It’s an investment in your future self.
  4. What happens if I delay claiming my State Pension?
    • Delaying your State Pension can result in increased payouts. It’s a strategic move for those looking to boost their retirement income.
  5. Are there any downsides to the State Pension system?
    • While generally beneficial, some may find the State Pension insufficient for their lifestyle. Supplementing with other savings or pensions might be necessary.

Conclusion: Your Pension, Your Future

As we wrap up this enlightening journey, remember, that your pension is not just numbers on paper. It’s the key to unlocking a future filled with possibilities. Seize control of your financial destiny, and let your pension be the wind beneath your wings.

Latest from Blog