The great pensions shortfall
Half OAPs don’t get full amount
FEWER than half of people qualifying for the new state pension are getting the full amount, figures from the Department for Work and Pensions reveal.
Of the 1.1 million people who have reached state pension age under the system that came in from April 2016, just 500,000 receive the full amount of £168.60 per week.
The ‘new’ state pension was billed as a “flat rate” system but people are receiving varying amounts.
And pensioners are finding out too late that they have been penalised for National Insurance discrepancies during their working life.
An estimated 500,000 people receive three-quarters of the full amount, around £126 per week, and the rest receive much less. Those who receive £40 a week less lose out to the tune of £2,000 a year, or £41,600 over a 20-year retirement.
Pension experts say it will be at least 30 years before everyone gets the full amount, after years of the government tinkering with the system.
To qualify for the full pension, people need to have paid 35 years of full National Insurance contributions, ie 12 months of each of those years. But many people were contracted out of the state pension or had years where they did not pay it for all 12 months. Andrew Tull, from investment firm Canada Life, said the new system was “almost impenetrable”. Stephen Lowe from retirement specialists Just Group warned the “safety net” level of state pension may be “lower than people think”. The Department for Work and Pensions said no one receives less than would have under the old system.
■ You can check your state pension forecast at gov.uk/check-statepension or by calling 0800 731 0175.