The foundation
What will the State Pension actually give you?
It's the largest inflation-linked income most people will ever have, and the one they most often dismiss. Worth knowing yours precisely.
It's the largest inflation-linked income most people will ever have, and the one they most often dismiss. Worth knowing yours precisely.
The full new State Pension is around £12,000 a year in current terms — a little under £1,000 a month. For a couple who both qualify in full, that's about £24,000 between you.
For the full amount. At least 10 years to get anything at all. Fewer than 35 and you get a proportion.
Under the triple lock it increases by the highest of earnings growth, inflation, or 2.5%. In a plan modelled in today's money, that means it holds its purchasing power — which is exactly what you want it to do.
Currently 66, rising to 67 between 2026 and 2028, and to 68 thereafter. Check yours rather than assuming — a year either way is a meaningful number.
£12,000 sounds modest next to a pension pot. Consider what it would take to replicate it.
An income of £12,000 a year, rising with inflation, guaranteed for life, with no investment risk and no chance of running out. To generate that from a pot using a cautious sustainable withdrawal rate, you'd need somewhere in the region of £300,000 — and even then it wouldn't carry the same guarantee.
People routinely dismiss the State Pension as “not much” and then plan as though a £300,000 pot is the foundation of their retirement. It's the other way round: the State Pension is the foundation, and the pot is what buys the choices on top.
A surprising number of people have gaps they don't know about, and some of them can still be filled.
Free, on gov.uk. It shows what you're on track for, how many qualifying years you have, and where the gaps are. It takes about five minutes and it's the most useful five minutes in this whole subject.
Years abroad. Long periods self-employed with low profits. Time out of work without claiming credits. Company directors on very low salaries — which catches a lot of owners who thought they were being efficient.
Voluntary National Insurance contributions can top up past years, within time limits that change. Whether it's worth doing is arithmetic — and for many people it's one of the better-value things available.
Taking a salary below the threshold that generates a qualifying year is a false economy that can cost far more in lost State Pension than it saves in NI. Worth checking with your accountant which side of the line you're on.
Two things, and both change the shape of a retirement.
The bridge years are the expensive ones. Stop at 60 with a State Pension age of 67 and you're funding everything yourself for seven years. That period usually costs more than any other part of the plan, and it's why stopping early is disproportionately expensive.
After it arrives, the pot has much less to do. Someone needing £36,000 a year drops to needing £24,000 from investments once £12,000 arrives — a third less. For a couple it can halve. Plans that ignore this consistently overstate what people need.
The free projection lets you include or exclude it and see the difference. For most people it's the single largest line in the whole calculation.
It is a reasonable worry and impossible to answer with certainty. What we can say is that changes to date have been made through the State Pension age rather than by withdrawing it, and they have generally been announced years ahead. If you would rather see your plan without it, that is a sensible test to run and takes seconds.
It counts as taxable income, though it is paid without tax deducted. On its own it sits below the personal allowance of £12,570, so there is usually no tax on it alone — but it uses up most of that allowance, which means other income on top is taxed sooner than people expect. That interaction catches a lot of people out in the first year.
Deferring increases the amount you eventually get, and whether that is worthwhile depends on your health, your other income and how long you expect to need it. It is arithmetic rather than advice, and we can model both versions so you can see the crossover point in your own numbers.
Possibly. Voluntary contributions can fill past gaps within time limits, and the value is often good compared with other ways of buying guaranteed income. Start with your forecast on gov.uk, which shows exactly which years are incomplete and what each would cost to fill.
Under the new State Pension each person builds their own based on their own National Insurance record — there is no automatic spouse's pension as there was under the old system. For couples that makes it worth checking both forecasts, particularly where one person took years out of work.