Get to know your State Pension entitlement

By November 16, 2022Pensions
Mature woman reviewing pension options on a laptop at home

With the appointment of Rishi Sunak as Prime Minister, attention has turned to the potential tax increases and cost savings that may be needed to balance the books. The anticipated fiscal statement, which was first scheduled for 31st October, has now been upgraded to a full Autumn Statement, to be delivered on Thursday. One of the possible contentious decisions to be reached by the Chancellor will be the level of increase in the State Pension from April 2023.


History of the Triple Lock

Since 2010, the annual increase to the State Pension has been subject to a “Triple Lock”. This is a guarantee that the annual increase would be calculated by the greater of the Consumer Price Index (CPI), average earnings, or 2.5%. This has ensured that the State Pension has kept up to date with rising prices since 2010, and the additional guarantees provided by the Triple Lock has given further protection in periods when inflation has been low. For example, in 2014-16, when annual CPI fell below the 2.5% level, the minimum lock at 2.5% provided an increase in the State Pension above the prevailing rate of inflation.

The rate of CPI inflation used to calculate the increase to the State Pension is the CPI annual rate as at the September preceding the date of the increase. For the increase due in April 2023, the September 2022 CPI figure of 10.1% will be used.


How State Pension is calculated

The amount of State Pension to which an individual is entitled depends on their National Insurance contribution record. This includes contributions made through work, and contributions added when an individual is unable to work. You need 35 qualifying years of National Insurance contributions to get the full amount, and a minimum of 10 qualifying years are needed to be entitled to any level of State Pension.

Credits earned before 6th April 2016 are treated differently to those earned after this date. At the point at which an individual reaches State Pension age, a “starting amount” is calculated, which is the larger of the pension you would receive under the former State Pension system, or the new State Pension, which currently amounts to £185.15 per week. It is, therefore, possible that the entitlement under the former system provides a greater entitlement than the new State Pension, and this amount is protected, and paid on top of the new full State Pension.


How to check your State Pension entitlement

It is a good idea to obtain a State Pension forecast, which provides an indication of the likely State Pension to which you will be entitled. You can either obtain a forecast from the Government Gateway, or submit form BR19 to the Department for Work and Pensions. The forecast will also provides details of the qualifying years on your National Insurance record, from which you can identify any gaps in the record.

If there are any gaps, an individual can make voluntary National Insurance contributions, which can make up for years where a full contribution was not made. Individuals can make contributions to catch up any gaps in their record during the last six years, and the Government’s Future Pension Centre will be able to provide details of the cost of the voluntary contributions.

It is often the case that making voluntary contributions, where necessary, offers good value for money. However, each individual needs to consider their own position to determine whether it is worth making voluntary contributions.


Increasing retirement age

The age at which individuals are entitled to their State Pension remains under review, after a number of changes over recent years. Under the current legislation, State Pension age is currently 66 and this will gradually rise to 67 for those born on or after April 1960. A second increase is also scheduled, to age 68, between 2044 and 2046 for those born on or after April 1977; however, there have already been consultations, which have looked at bringing this date forward to between 2037 and 2039. A further announcement is due on the proposed changes by May 2023.


Build your own provision

Whilst the State Pension is available to all individuals with sufficient National Insurance contributions, relying on the State Pension alone is likely to lead to a very modest retirement. This is why we strongly recommend individuals look to make their own pension provision, to supplement the State pension payments. Most employees are now eligible to join auto-enrolment pension schemes, although it is important to ensure an adequate level of contribution is made, and your pension is invested in good performing funds.

Another reason to build personal pension provision is the increase in the State Pension age over coming years. Whilst average life expectancy has risen steadily over recent years, working right up to State Pension age may not be desirable or indeed practical. For example, depending on the nature of the job, ill health could force an early retirement, and by using the flexibility offered by personal pensions, it may be possible to look to draw a pension in the years leading up to State Pension age, allowing a reduction in hours or potentially an early retirement. Whether this is feasible depends on many factors, and this is where personalised financial advice can help you plan ahead for the future with confidence.

If you are interested in discussing the above further, please speak to one of our experienced advisers here.


The value of investments and the income they produce can fall as well as rise. You may get back less than you invested. Past performance is not a reliable indicator of future performance. Investing in stocks and shares should be regarded as a long term investment and should fit in with your overall attitude to risk and your financial circumstance.