Your retirement income will likely come from numerous sources. Your workplace and private pensions, for example, as well as non-pension savings and investments like ISAs, or rental income from buy-to-let properties.

It’s important not to forget your State Pension too.

While it won’t form the majority of your post-work income, neither should it be dismissed. A guaranteed, regular, and inflation-proofed amount can form the stable backbone around which you build your retirement plans.

To do this though, you’ll need to understand exactly what the State Pension offers. From the amount you’ll receive and when, to how to claim it, and how to ensure you receive your full entitlement. Plus, why you might opt not to take it.

Keep reading for everything you need to know about your State Pension.

The full new State Pension is currently £11,502 a year

The first thing to note is that to receive the State Pension, you need to claim it.

As you approach State Pension Age, you should receive a letter from HMRC. Actioning this letter will allow you to begin receiving payments as soon as you become eligible. Failing to reply will mean that your State Pension automatically defers (more on which later).

For the 2024/25 tax year, the new State Pension currently stands at £221.20 a week (or £11,502 a year).

To receive your full State Pension entitlement, you’ll need 35 “qualifying years” of National Insurance contributions (NICs). HMRC counts any year in which you:

• Worked and made NICs
• Received National Insurance credits

• Paid voluntary NICs.

While 35 years of NICs entitles you to the full amount, you can still receive a portion of the State Pension if you have between 10 and 35 years of qualifying years. Less than 10 years, though, and you won’t have any State Pension entitlement.

You can check your National Insurance record to find out how much State Pension you might be entitled to. If you have gaps in your record, it might be possible to make top-ups, increasing the amount you receive.

The rules around how and when this is an option can be complex so be sure to speak to us if you think you have gaps that you’d like to fill.

The State Pension triple lock means that the amount you receive rises each year

Thanks to the State Pension triple lock, the value of your State Pension rises each year in line with the higher of:

• Average earnings growth
• Inflation, as measured by the Consumer Prices Index (CPI)
• 2.5%.

The triple lock means that your income is shielded from rises in living costs, especially useful during times of high inflation as we have seen during the last few years’ cost of living crisis.

Deferring your State Pension could see you receive more when you need it most

As we have already said, you don’t receive your State Pension automatically; you have to claim it. Fail to do so and your State Pension will be deferred.

There are some advantages to this, though, which means you might opt to defer on purpose.

The State Pension amount you receive when you begin to take it will increase each week you defer, as long as you defer for at least nine weeks. Your payments increase by the equivalent of 1% for every nine weeks you defer – or by around 5.8% for every 52 weeks.

When you decide you’re ready to start claiming, the extra amount is paid with your regular State Pension payment. If you can afford not to take the State Pension in the early, active years of your retirement, you might benefit from the higher amount at a time when you need that money most.

You might opt to defer if you plan to keep working but you’ll need to consider the tax implications

The current State Pension Age is 66, but it is due to rise over the next few years. First, it will increase to 67 between 2026 and 2028. A further rise, to 68, is currently scheduled for 2044-2046. This second rise is still under review, though, and could be brought forward to 2037-2039.

If you plan to keep working beyond your State Pension Age, you’ll need to factor in the age at which you’ll be able to claim the State Pension. There are tax implications too.

With the Income Tax Personal Allowance currently frozen at £12,570 until at least 2028, you’ll need to think about the effect of work, or a deferred State Pension amount, on your tax bill.

Get in touch

If you need help factoring the State Pension into your long-term retirement plans, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.