Thousands of state pensioners get 'well above the standard figure' as payments hit £23,000 a year

Retirees getting the full new state pension can get up to £221.20 a week, or £11,502 a year, depending on their national insurance contributions.

Not all state pensioners will get this amount due to complexities in the system, meaning some are left with a shortfall, while others can get twice the full amount.

Steve Webb, a former pensions minister who introduced the 2016 changes, now a partner at pension consultants LCP, said: “The old state pension system produced wildly different outcomes for retirees depending on their work and family history, whether they were married, divorced, widowed or single and whether they had opted out into a workplace pension scheme instead.

“The new system produces much more standardised outcomes, though because of complex transitional protection rules, some people under the new system can still get pensions well above the standard figure based on rights built up before the rules changed.

“Over time, hopefully, what people get in retirement will be more and more predictable and make financial planning easier.”

Some 4,921 retirees received at least £441 a week in state pension payments in 2022-23 - this equates to an annual income of £23,000, The Telegraph reported.

Of these, only one per cent retired since April 2016, when the new state pension system was introduced. The remaining 99 per cent receive the old state pension.

Thousands of people who retired before the state pension changed in 2016 have been able to boost their payments by double.

Those under the old system can get higher sums by claiming their basic pension - which is currently £169.50 per week, coupled with earnings-related extra amount (SERPS).

SERPS was a scheme that allowed people to increase their state pension income by building up an additional state pension based on their earnings throughout their working lives. SERPS was designed to be a top-up to the basic state pension.

These people have been able to boost their payments to much higher amounts using SERPS for a maximum of £218.39 a week.

On top of this, some people defer taking their pension which can also add thousands to their annual amount.

Under the old system, some pensioners got an extra 10.4 per cent for each year of deferral - equivalent to £40.30 – for each year deferred.

However, the deferral rate has since been reduced to a 5.8 per cent uplift for every year of deferral.

Once additional entitlements are taken into account, the old system can be far more lucrative than the new as the full new state pension rose is currently £221.20 a week.

To get the highest payments, a retiree would need to be drawing money from an additional earnings-related pension, for a maximum of £218.39 a week and claiming their state pension. These two figures add up to £387.59, but the total can be boosted further.

So with a big SERPS pension and several years of deferral, people could end up with a very hefty state pension - though they wouldn’t have received it until they were several years after pension age, Webb explained.

To be sure about how much one can expect in their retirement, Britons can complete a state pension forecast by visiting the Government website.

Here they will be able to check if they have gaps in their National Insurance record. If they do, their payment forecast will look smaller.

Retirees entitled to a full state pension will need around 35 years of National Insurance (NI) contributions. To get the full basic state pension people need 30 qualifying years. To get anything at all, people need a minimum of 10 years’ worth of contributions.

Those who are close to the state pension age and don’t have 35 full qualifying years of contributions, could top up to ensure they get the full amount.

The rate is currently £907.40 for a full year (£17.45 per week), which will boost one's state pension by around £302 a year (£5.82 a week).

Even though those on the old system can boost their payments, women, the self-employed and low-earners are still losing out.

This was because they were likely to have lower National Insurance contributions and did not benefit as much from additional earnings-related pension, which was earnings-linked. The new system boosted payments for these groups but left pensioners stuck on the old system at a permanent disadvantage.

Baroness Altmann, a former Pensions Minister, said: “[Additional earnings-related pension] was an incredibly generous addition to state pensions which gave high earners much higher state pensions. [But] most women or low earners will not have had as much additional state pension.

“There are vast differences between the pensions of men and women, and women have long been the poor relation in pensions. While the new system will reduce inequality, it has not entirely eliminated it.”