State Pension: Do you understand yours? Thousands don’t


Businessman Drawing Question Mark SignA new report has claimed that thousands of people do not understand how State Pensions are calculated and that they won’t be entitled to the full flat rate State Pension when it is introduced.

The Works & Pensions Committee, led by veteran MP Frank Field, has said that 55% of people will get less than the £155.65 flat rate State Pension, mainly because of gaps in their National Insurance record.

The Committee also said that “failures of communication mean that too few people understand it”.

The report comes after the WASPI (Women Against State Pension Increases) campaign, raised the issue of poor Government communication of rises in the State Pension age and forced three parliamentary debates.

Flat rate State Pension

From 6th April 2016 the new flat rate State Pension will replace the existing basic and additional State Pensions, but only for new claimants; anyone receiving their State Pension before this date will not be affected.

The flat rate State Pension will initially be set at £155.65 per week, but depending on your National Insurance record you may receive more or less than this amount; leading to confusion about the use of the term ‘flat rate’.

It is estimated that 32% of people will get more than the flat rate, with 55% receiving less. There is mounting concern that many people retiring after April this year are unaware they will get less than the flat rate. Members of the Work & Pensions Committee have therefore called on the Government to write to those people who stand to receive less than they had previously expected and set up a telephone helpline to assist those affected.

Those who may get less State Pension than they anticipated include:

  • People who have and incomplete National Insurance record due to periods when they were not working. Women, who may have taken time off to raise a family, are particularly affected
  • People whose State Pension is based on the National Insurance record of their spouse
  • People who opted out of the additional State Pension via their Occupational Pension who instead have built up a ‘Guaranteed Minimum Pension’

The Chairman of the Committee, Frank Field, said: “The oversimplified message about the flat-rate amount has left many people unprepared and confused.”

Although, he did go on to say that the new flat rate State Pension would “ultimately be a welcome simplification of an over-complicated system” and that in the long run, by 2040, over 80% of pensioners can expect to receive the new flat rate.

Confused about the State Pension?

The report by the Work & Pensions Select Committee highlights just how confusing the State Pension can be.

Furthermore, regular changes by the Government have made it increasingly hard to plan for retirement with any certainty.

We are here to help.

If you would like advice on your State Pension, or planning for your retirement, call Bev or Sarah on 0115 933 8433 or email