UK State Pension
UK STATE PENSION
The UK State Pension explained
The Basics
To qualify for any UK state pension you must have a minimum of 10 qualifying years on your National Insurance record. Your National Insurance record effectively reflects the National Insurance deductions you paid to Her Majesty’s Revenue & Customs (HMRC) while working in the UK.
If an individual has less than 10 years but 3 or more years on his/her national insurance record, then they may be entitled to make voluntary contributions to enhance their national insurance record and thereby secure a UK state pension.
Starting Amount
For individuals with both pre and post 5th April 2016 national insurance contributions the state pension entitlement is the aggregate of:
- state pension entitlement accrued up to 5th April 2016 @ £176.45 per week
PLUS
- state pension entitlement accruing after 5th April 2016 @ £230.25 per week
The state pension entitlement accrued up to 5th April 2016 is referred to as the starting amount, ie. (a) above. This is best explained by way of example.
John started working in the UK in April 1992 and intends to return to Ireland in March 2019. Upon reaching retirement age, he will qualify for a UK state pension of:
- a) starting amount (pre April 2016)
- April 1992 to March 2016: 24 years
- 24/30 x £176.45 = £141.16 per week
PLUS
- b) post April 2016
- April 2016 to March 2019: 3 years
- 3/35 x £230.25 = £19.73 per week
John’s total state pension when he retires in March 2019 will amount to the total of (a) plus (b) or £160.89 per week.
State Pension Amount
Pre 5th April 2016
The current standard state pension payment from 5th April 2025 is £176.45 per week. To qualify in full for the weekly payment you had to have 30 full qualifying years on your national insurance record ie.
30/30 x £176.45 per week
If you had less than 30 qualifying years, then you qualify on a proportional basis (subject to having the minimum 10 years). Therefore, if you had 10 years you were entitled to
10/30 x £176.45, or £58.82 per week.
Post 5th April 2016
With effect from 5th April 2025 the standard rate of state pension payment in the UK is £230.25 per week. However, to qualify for the full weekly payment you now need a 35 qualifying years on your national insurance record, instead of the previous 30 years. Therefore, an individual with 10 qualifying years on their national insurance record after 5th April 2016 (ie retired in April 2026) will qualify for:
10/35 x £230.25, or £65.78 per week
Individuals who have made contributions before and after 5th April 2016 have a hybrid entitlement to the state pension of both pre and post 5th April 2016 state pension benefits, key to which is the ‘starting amount’.
Amounts quoted above are based on the published UK state pension rates for the year beginning 5th April 2025.
Retirement Age
The state pension originally was payable from when a male reached the age of 65 and a female reached the age of 60. The female retirement age was raised progressively since 2010 to converge on the male retirement age.
In recognition of the significant increases in life expectancy and the increasing burden on the State to fund pensions, the state retirement age is being progressively increased. Since 2020 the state retirement age is 66 for both males and females.
The retirement age will raise to 67 for both males and females from 2028 and there are plans to raise the retirement age further to 68. Similar provisions for deferring the State Pension age have already been planned for Ireland but have been deferred for the time being.
Triple-Lock Provisions
Triple-lock provisions in relation to state pensions were introduced by the Conservative-Liberal Democrat coalition in 2010 and is effectively a government commitment that the state pension will rise annually by the higher of:
- The rate of inflation (CPI)
- The increase in the average rate of Earnings
- 2½%
The ‘triple-lock’ has no legislative basis. It is only a political commitment and can be revoked at any time. However, it still effectively represents a government commitment of annual increases in the State Pension. No such guarantee or commitment exists in Ireland.
It is implicit in the Brexit withdrawal agreement as it stands that EU resident pensioners will continue to enjoy the benefits of the “triple lock” as long as it remains government policy.
The annual increases under the “triple lock” can be seen here:
| Year | State Pension was uprating | Which part of the triple lock kicked in? |
| Apr-11 | 4.60% | Inflation (RPI)* |
| Apr-12 | 5.20% | Inflation (CPI) |
| Apr-13 | 2.50% | Guaranteed minimum |
| Apr-14 | 2.70% | Inflation (CPI) |
| Apr-15 | 2.50% | Guaranteed minimum |
| Apr-16 | 2.90% | Average earnings |
| Apr-17 | 2.50% | Guaranteed minimum |
| Apr-18 | 3.00% | Inflation (CPI) |
| Apr-19 | 2.58% | Guaranteed minimum |
| Apr-20 | 3.91% | Inflation (CPI) |
| Apr-21 | 2.50% | Guaranteed minimum |
| Apr-22 | 3.05% | Inflation (CPI) |
| Apr-23 | 10.08% | Inflation (CPI) |
| Apr-24 | 8.5% | Average earnings |
| Apr-25 | 4.1% | Average earnings |
Voluntary Contributions
Your National Insurance record can be improved by paying once-off amounts to secure added qualifying years. For pre-2016 years, a once-off payment of £907.40 will add a qualifying year to your record at the default Class 3 rate (*).
Example: HMRC confirmed to Frank that he had 8 qualifying years on his record and sent him a letter stating the amounts required to buy each of the respective years. Ultimately Frank paid £5,769.40 adding a further 7 qualifying years to his National Insurance record.
As it originally stood, Frank was entitled to no state pension at all (<10 qualifying years) but, by adding 7 further years, he now qualifies for a weekly pension of £88.22 (€103.79 approximately or, €5,398per annum). This represents truly excellent value for a number of reasons:
- In a little over 18 months of retirement he recovers the full voluntary contribution amount.
- To purchase a life annuity yielding €103.79 per week would require a fund of roughly £130,000 to pay for it at retirement age.
- UK state-pensions increase annually under the “triple-lock” provisions.
(*) There is also the possibility of paying voluntary NI contributions at a lower Class 2 rate which counts equally towards the UK state pension, although terms and conditions apply. The Class 2 rate is typically about 20% of the cost of the Class 3 rate, c.£179.40 for each additional year instead of £907.40. Class 2 and Class 3 voluntary contributions count equally for the UK state pension.
Time Limits
The option to make voluntary contributions normally extends back only 6 years under normal circumstances. However, by concession HM Revenue & Customs are accepting payments for 18 years of arrears, 2006/07 to 2023/24 inclusive.
The concession lasts until April 2025 when the maximum window of 6 years of arrears will be restored. Therefore in the last tax year, 2024/25, an individual could pay back arrears as far as 2006/07, 18 years in total. From April 2025, they can only arrears as far as 2019/20.
It is not possible to make voluntary contributions for years prior to 2006/07.
As each year passes the opportunity to make voluntary contributions shrinks. Hence the urgency !!
Ready To Start?
Great, click below and fill out the enquiry form. Or if you still have questions feel free to contact us.