The new State Pension was introduced for people who reach State Pension age on or after 6 April 2016.

This will apply to:

• Men born on or after 6 April 1951
• Women born on or after 6 April 1953
• Individuals are able to check when they reach State Pension age at www.gov.uk/state-pension-age.

Those born before these dates, including those already in receipt of the State Pension prior to 6 April 2016, will be able to claim under the old system instead.  Details of the old system can be found at www.gov.uk/state-pension.

National Insurance and the new State Pension

The full weekly rate of the new State Pension in 2016/17 is £155.65, however the amount of new State Pension available depends on an each individual’s National Insurance record.

The actual weekly pension could be more or less than the full rate, depending on the individual’s National Insurance record, with at least 10 qualifying years required to get any new State Pension.

In order to determine this they will calculate the Starting Amount, which is the higher of:

• The amount the individual would have got under the old State Pension rules (including basic State Pension and additional State Pension)
• The amount available under the new State Pension rules

Starting Amounts will include some adjustment for any time contracted-out of the additional State Pension, which will mean that many people, including those with more than the maximum 35 qualifying years, will get a Starting Amount lower than the full rate of the new State Pension.

Those with less than the full rate, and under the State Pension age, will be able to increase the future State Pension income by continuing to work and paying National Insurance contributions or adding extra years to their National Insurance record. Each year will add to the new State Pension 1/35thof the full amount (about £4.45 for 2016/17) for each qualifying year from 6 April 2016.

Contracting-out

The old State Pension has two parts – the basic State Pension and additional State Pension (sometimes called the State Second Pension, S2P or SERPS).

Anyone who has been ‘contracted-out’ either paid National Insurance at a lower rate or some of their National Insurance contributions were used to contribute to a private pension instead of the additional State Pension.

Most people reaching State Pension age after 6 April 2016 will have been contracted-out of the additional State Pension at some time and individuals are able to find out if they have been contracted-out at www.gov.uk/contracted-out/check-if-youre-contracted-out.

In April 2016, contracting out via an occupational pension scheme, and the reduction in National Insurance that contracted-out employers and employees received, ended.

Deferring the new State Pension

You do not have to retire to claim the new State Pension, however it is possible to defer the new State Pension after the State Pension age, to increase the amount received. In fact, the new State Pension should automatically defer until an individual claims it.

The old system allowed a deferred element of 12 months or more to be taken as a one-off lump sum, however the new State Pension only allows for higher weekly payments once the State Pension is claimed.

The new State Pension will increase by 1% for every 9 weeks that it is not claimed after an individual’s State Pension age. This works out as just under 5.8% for every full year.

More information on deferring the State Pensioncan be found here www.gov.uk/deferring-state-pension

More information

For more information on these changes visit www.gov.uk/yourstatepension.

Individuals are able to request a personalised new State Pension statement atwww.gov.uk/check-state-pension.

There is also a YouTube channel devoted to pensions here www.youtube.com/PensionTube.

Your usual consultant will also be able to help, although please note that they will not be able to apply for personal information on your behalf.

This article is based on our understanding of current law and government practice, which cannot be guaranteed and could be subject to change.