People are being encouraged to check if they can increase their state pension, as the average payout is currently over £725 a year less than the full amount. According to data from the Department for Work and Pensions (DWP), the average full state pension payout for men is £209.49 a week, while women receive an average of £205 a week. When these two amounts are averaged, at £207.25 a week, it falls £13.95 a week short of the full new state pension of £221.20. This equates to a monthly shortfall of £60.45 or £725.40 a year.
To receive the full new state pension, you typically need 35 years of National Insurance (NI) contributions. The number of people on the new state pension has increased by 730,000 over the year to May 2024, representing a rise of over a fifth. Individuals on the pre-2016 basic state pension often receive more than the current full basic state pension amount of £169.50 a week. Male claimants receive an average of £217.15 a week, while women receive £186.03 a week due to additional payments received as part of the old scheme, such as through the state earnings-related pension scheme (SERPS).
Now is a good time to consider making voluntary NI contributions towards your state pension, as you can do so over an extended period. You can typically only buy contributions up to six years ago, but this has been extended by another 10 years, allowing contributions dating back to the 2006/2007 tax year. You can check for any gaps in your National Insurance record by viewing your record on the Government website. Additionally, you can use the state pension forecast tool to see how much state pension you are set to receive and if you can increase the amount by topping up.
The current state pension age is 66 for both men and women, but it will rise to 67 between 2026 and 2028. There are plans for it to rise again from 67 to 68 between 2044 and 2046, though this second transition may be moved forward. State pension payments increase each year in line with the triple lock, resulting in a 4.1 percent boost to payments next year. With this increase, the full new state pension will rise from £221.20 a week to £230.30 a week, while the full basic state pension will increase from £169.50 a week to £176.45 a week.
It is crucial for individuals to be aware of these changes and take steps to ensure they are receiving their full state pension entitlement. By checking their National Insurance record, utilizing the state pension forecast tool, and considering voluntary NI contributions, individuals can work towards securing a comfortable retirement income. It is never too early to start planning and preparing for the future, especially when it comes to financial stability in retirement.
