State pension income can come from one of two types of setups which are dependent on a person’s gender and when they were born. Men born before April 6 1951 will claim the “basic” state pension, as will women born before April 6 1953.
Anyone born beyond these dates will claim the “new” state pension.
The new state pension was introduced in 2016 and a lot of state pension rules are focused around this year.
Currently, starting amounts for state pensions may include a deduction if the claimant was in certain earnings-related pension schemes at work (such as a final salary or career average pension) before April 6 2016, or workplace, personal or stakeholder pensions before April 6 2012.
Some people in these circumstances may have paid lower levels of National Insurance contributions and paid into one of these pensions instead.
This is known as being “contracted out of the additional state pension”.
The additional state pension is an extra amount of money that some people could get on top of their basic state pensions.
It’s unlikely that many people are still affected by all these different basic state pension circumstances as on April 6 2016 the government changed the rules so that people who were contracted out would no longer be and they’ll go back to paying the regular National Insurance amounts.
With all the different changes being introduced, it may be difficult for people to work out if they were contracted out during their working lives but thankfully, the government provides guidance on this problem.
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The government details that the first port of call should be to check old pay slips if possible.
If the person involved was contracted out, they should check the details of the National Insurance payment on the pay slip.
If they were contracted out, there will be the letter D or N next to the National Insurance line.
They will not have been contracted out if there is the letter A next to it.
If any other letters are next to the National Insurance line they should check with the employer or pension provider.
The government’s website details that employees are more likely to have been contracted out if they worked in certain public sector jobs, such as:
- the NHS
- local councils
- fire services
- the civil service
- teaching
- police forces
- the armed forces
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Most retirees will receive the new state pension which will require at least 10 years of National Insurance contributions.
Those who have 35 years of contributions under their belt will receive the full amount of £175.20 per week.
State pensions, of all kinds, will not be paid out automatically; they'll have to be claimed.
The quickest way to claim a state pension is by going online but they can also be applied for by phone or by completing a physical form.