The Department for Work and Pensions (DWP) has released new statistics showing that the State Pension currently provides regular financial support to nearly 12.7 million older people across the UK. This benefit is available to those who have reached the eligible retirement age of 66, set by the UK Government and have made at least 10 years’ worth of National Insurance Contributions.
However, many individuals nearing the official retirement age this year may not realise that this contributory benefit isn’t automatically paid out by the DWP and needs to be claimed – or they risk missing out on weekly payments of up to £221.20.
The reason the money isn’t automatically paid when someone reaches State Pension age is because some choose to defer their claim in order to continue working and contribute more towards their pension pot. This is particularly common among those who haven’t paid the full quota of 35 years’ worth of National Insurance Contributions, or were ‘contracted out’.
The DWP‘s guidance explains: “You do not get your State Pension automatically – you have to claim it. You should get a letter no later than two months before you reach State Pension age, telling you what to do.”
It further clarifies that individuals can either claim their State Pension or delay (defer) claiming it. It states: “If you want to defer, you do not have to do anything. Your pension will automatically be deferred until you claim it.”, reports the Daily Record.
This means that unless you respond to the letter confirming your desire to start claiming State Pension, you will not receive any payments as the DWP will interpret a lack of response as a wish to defer.
Deferring your State Pension could boost the payments you receive each week when you decide to claim it, provided you defer for at least nine weeks. Your State Pension increases by the equivalent of 1% for every nine weeks you defer, equating to just under 5.8% for every 52 weeks.
The additional amount is paid with your regular State Pension payment, however, it’s crucial to note that any extra payments you receive from deferring could be taxed – more information can be found on GOV. UK here.
It’s also important to remember that deferred State Pensions increase annually in line with the September Consumer Price Index (CPI) inflation rate and the highest measure of the Triple Lock policy.
New State Pension payment rates 2024/25
- Full payment rate: £221.20
- Every four-week pay period: £884.80
Basic State Pension payment rates 2024/25
- Full payment rate: £221.20
- Every four-week pay period: £884.80
Your first payment
Your first payment will be within five weeks of reaching State Pension age and you will receive a full payment every four weeks thereafter. You might receive part of a payment before your first full payment.
The letter will inform you what to expect.
You can also opt to receive your State Pension payments weekly or fortnightly, which will result in a shorter delay for the first payment.
Your State Pension payment day
The day your State Pension is paid depends on your National Insurance number.
The last two digits of your National Insurance number are crucial in determining your DWP ‘starting amount’ for the new State Pension.
The last two digits of your National Insurance number:
- 00 to 19 – paid on a Monday
- 20 to 39 – paid on a Tuesday
- 40 to 59 – paid on a Wednesday
- 60 to 79 – paid on a Thursday
- 80 to 99 – paid on a Friday
If you have qualifying years on your National Insurance record as at April 5, 2016, the DWP calculates a ‘starting amount’ for you for the new State Pension.
This is the higher of either:
- the amount you would have got under the previous State Pension system up to 6 April 2016, or
- the amount you would get on your record to 6 April 2016 if the new State Pension had been in place at the start of your working life
Both amounts reflect any periods when you were contracted out of the Additional State Pension. Your ‘starting amount’ could be less than, more than or equal to the full new State Pension.
To find out how much State Pension you could get, you can get a State Pension forecast online from the Check your State Pension service here. This provides personalised information, including your State Pension age, an estimate of how much State Pension you may get at that point and if you can increase this amount.
It also allows you to view your National Insurance contribution history. More information about deferring your State Pension can be found on the GOV.UK website here.