State pension – how to check if you’re getting the right amount

GETTING your state pension when you retire can provide you with thousands of pounds to live off each year.

You’ll want to make sure you’re getting the right amount and not missing out on money you’re entitled to – here’s how to check.

State pensions are calculated for you - but may not always be correct — State pensions are calculated for you – but may not always be correctCredit: Alamy

The amount you get from your state pension depends on how old you are and when you retired.

That’s because there are two systems the new state pension and the “old” state pension.

The amount also depends how much you’ve put in while working through National Insurance contributions.

Some people have built up entitlement under the old system and some under the new system, while others have built up their pension under both schemes and will get a combination of both.

What are the different types of pension?

WE round-up the main types of pension and how they differ:

Personal pension or self-invested personal pension (Sipp) – This is probably the most flexible type of pension as you can choose your own provider and how much you invest.
Workplace pension – The Government has made it so it’s compulsory for employers to automatically enrol you in your workplace pension, unless you choose to opt out. These so-called defined contribution (DC) pensions are usually chosen by your employer and you won’t be able to change it. Minimum contributions rose to 8% in April 2019, with employees now paying in 5% and employers contributing 3%. This is up from the 5% of contributions workers and companies were required to pay in previously, where employees contributed 3% and employers 2%.
Final salary pension – This is a also a workplace pension but here, what you get in retirement is decided based on your salary, and you’ll be paid a set amount each year on retiring. It’s often referred to as a gold-plated pension or a defined benefit (DB) pension. But they’re not typically offered by employers anymore.
New state pension – This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £179.58 a week and you’ll need 35 years of national insurance contributions to get this. You also need at least ten years’ worth of national insurance contributions to qualify.
Basic state pension – If you reached the state pension age on or before April 2016, you’ll get the basic state pension. The full amount is £137.60 per week and you’ll need 30 years of national insurance contributions to get this. If you have the basic state pension you may also get a top-up from what’s known as the additional or second state pension. Those who have built up national insurance contributions under both the basic and new state pensions will get a combination of both schemes.

It can appear complicated and some people have even been given the wrong state pension through errors in the old system.

But here we explain how you can check your entitlement and if you’re getting the rights amount.

What’s the new state pension?

The new state pension is paid to those who reached state pension age after April 6 2016.

The new state pension is worth up to £179.58 per week and is based on 35 years of National Insurance contributions.

You need a minimum of 10 years of National Insurance contributions to qualify for ant new state pension at all.

These don’t all have to be in a row and you may get credits for time that you weren’t working but were looking after children.

The amount of pension you get also rises each year.

What’s the “old” state pension?

For anyone who retired before this date, there’s the basic state pension and a potential top-up from the additional state pension, depending on circumstances.

The basic state pension is worth up to £137.60, with the top-up worth £82.46 and it’s based on 30 years of National Insurance contributions.

Some people will have built up their entitlement to the state pension under this system and the new system.

Those who have paid national insurance contributions under both will get a combination of both schemes.

How do I know I’m getting the right amount?

How much state pension you get is worked out based on these systems and your records of paying National Insurance.

It’s worth checking all the details the Department for Work and Pensions (DWP) and HMRC have for you, such as birth date, National Insurance records and other personal information.

It’s worth remembering you don’t get your state pension automatically, you have to claim it.

Before you turn the eligible age to start receiving your pension you’ll be sent a pack in the post from the DWP.

Check through all the information you have thoroughly.

If you’re not yet retired but want too know how much you will get, you can use the government’s state pension online forecast tool, which also tells you when you can claim it and how you can increase the amount, if possible.

If you are over 50, you can request a paper forecast by calling the Future Pension Centre on 0800 731 0175, according to AgeUK.

There are some circumstances where there have been errors made in calculating state pensions, even with the right information.

Anyone who thinks they are not getting the right state pension can contact the Pension Service for help.

Why wouldn’t I get the right amount of state pension?

There have been high profile errors in awarding some people the correct amount of state pension.

It’s worth checking you’re not among these groups of people affected, who could be owed money they’ve missed out on over the years.

Up to 200,000 women of retirement age may have been underpaid their state pension after the system failed to automatically give them a pay rise.

They are owed and estimated £2.7billion worth of arrears and it means on average, they could be owed a payout of £13,500, although the amount will vary.

Martin Lewis has explained to viewers of his Martin Lewis Money Show that the error, which stretches back 30 years, affects married women and widows aged 67 and older.

Women who retired on small state pensions before April 2016 were supposed to see their pension payments go up when their husbands reached retirement age.

Not everyone will receive an automatic payout, so it’s worth checking our guide about the issue and how to claim.

How to work out if you’re affected?

This online tool was launched last year by former pensions minister Steve Webb on behalf of actuarial firm LCP, after he first uncovered cases of women being paid the wrong state pension via his This Is Money column.
All you have to do is answer a series of questions and the tool will let you know if you have been underpaid.
To get paid, unfortunately all you can do is sit tight.
The Department for Work and Pensions is working to go through each payment which will take years.
You should eventually get a letter from the DWP about your payment but it is not clear how long this will take.
For more information you can call the Pension Service.

Meanwhile millions of pensioners have been left in “total confusion” thanks to a “contracting out” scheme – which means they no longer qualify for a full state pension.

These people will be on the old basic state pension.

They paid a lower rate of National Insurance while working, in exchange for a higher private pension, and as such, this will have reduced their state pension.

This was more likely to happen if you worked in the public sector.

Contracting out ended in April 2016 but some pensioners are now claiming this happened without their knowledge – meaning they were unable to properly plan for the future.