'Concerning' state pension knowledge gap leaves retirees with less than expected

Since April, pensioners on the full new state pension are getting £221.20 a week or £11,502.40 a year and those on the full basic state pension will now get £169.50 a week – or £8,814 a year.

However, Standard Life, part of Phoenix Group have highlighted the need for information around the payments people can expect to receive from the Government later in life to be made more accessible as 14 per cent of retirees are receiving less money than expected.

Patrick Thomson, head of research analysis and policy at Phoenix Insights, said: "Knowing how much you’ll get from the state pension, and when, is a vital part of retirement planning, with many relying on these payments to form the foundation of their retirement income.

"It’s concerning that a significant proportion of the population lack understanding in this area, particularly for those fast-approaching retirement age.

"We need to close this knowledge gap so people know what support they will receive from the state alongside any additional retirement savings, such as a workplace pension.

"Having this full picture will allow people to plan ahead and start to close savings gaps."

Standard Life research found that over a fifth (22 per cent) of retirees said they entered retirement unaware of how much they would receive from the state pension, while a quarter (26 per cent) didn’t know how to calculate their entitlement.

One in 10 also said they didn’t realise that their national insurance contributions determine the level of state pension paid in retirement and another 10 per cent said that it wasn’t easy to find out how much state pension they’d receive in later life.

Dean Butler, managing director for retail at Standard Life explained that although the 8.5 per cent boost was a welcome boost for millions, concerns have been raised about its sustainability for future generations.

With this level of debate and some complex rules and terminology, it’s understandable that a significant proportion of UK adults lack knowledge around specific state pension details such as the value of their entitlements, and when they’ll qualify for payment.

Butler said: "The state pension is a significant part of most people’s retirement income and it’s clear that greater prominence and more accessible information is needed so people feel confident and can plan for their financial future."

Phoenix Group’s longevity think tank, Phoenix Insights found that understanding of the state pension system is poor across all ages, with participants struggling to explain basic aspects of how the system works.

Over a fifth (22 per cent) of over 55s who are not yet retired do not know their state pension age and just three in ten (29 per cent) of this age group know how much the state pension is worth.

To help break down these complex ideals, Butler outlined the need-to-know information about the state pension:

What is the state pension? The state pension is an amount paid every four weeks by the government once someone reaches state pension age. However, not everyone can get the full state pension He said: "It might not be enough to live on by itself, therefore it’s important to know what yours might be, when you can claim it, and how it will stack up with your other retirement savings."

What’s the current state pension amount and how does National Insurance influence it? The current full state pension amount is £221.20 a week for the 2024/2025 tax year, £11,502.40 for the year, an increase of 8.5 pent from the previous tax year.

Butler added: "It’s worth keeping in mind that the amount you’ll get depends on your National Insurance record and how many qualifying years you have. You’ll usually need at least ten qualifying years on your National Insurance record to get any state pension. You’ll need 35 qualifying years to get the new full state pension if you don’t have a National Insurance record before April 6, 2016.

“In some circumstances, it’s possible to top up your National Insurance record, and your state pension forecast will highlight when this is an option.

“If you’ve reached state pension age and you’re on a low income, it’s worth checking if you’re eligible for pension credit. This tax year, (2024-25), pension credit usually tops up your weekly income to £218.15 if you’re single or your joint weekly income to £332.95 if you have a partner.”

When can I get the state pension? UK adults can currently receive the state pension from the age of 66, but this is set to rise to 67 by 2028 and again to 68 between 2037 and 2039.

Britons can use a retirement calculator to check when they'll reach state pension age. If they don’t want to take their state pension immediately, they can also choose to defer it. This means people could get larger payments when they do start claiming it, which might suit them depending on their circumstances.

How do I claim my state pension? Butler said: "You won’t get your new state pension automatically - you must claim it. You should get a letter no later than two months before you reach state pension age, outlining what you need to do."

If you’ve not received an invitation letter, but you’re within three months of reaching your state pension age, you can still make a claim, and the quickest way to do this is online. To complete your claim, you’ll need the following details:

• the date of your most recent marriage, civil partnership or divorce
• the dates of any time spent living or working abroad
• your bank or building society details
• the invitation code from the letter about getting your state pension

When will the state pension be paid to me? The payment day depends on one's National Insurance number, although they might be paid earlier if their normal payment day falls on a bank holiday.

Last 2 digits of NI number - Payment day of the week

• 00 to 19 - Monday
• 20 to 39 - Tuesday
• 40 to 59 - Wednesday
• 60 to 79 - Thursday
• 80 to 99 - Friday