STATE PENSION CALCULATOR: This formula is for valuing National Insurance contributions and credits made before the 6th of April 2016.
Your ‘starting amount’ forms part of the new State Pension. Your NI record prior to the 6th of April 2016 is then used to calculate the ‘starting point’.
The starting amount that you would get becomes the higher of either:
- The amount received under the old State Pension rules. This combines the basic State Pension and the Additional State Pension.
- The amount if the new State Pension had been in place at the start of your working life.
If you contracted out of the Additional State Pension your starting point amount will include a reduction. The reason you contacted out was because of the type pension you had. This could be a personal, stakeholder, or workplace pension.
Starting amount Less than the Full New State Pension
You can increase the amount of State Pension you get by adding more qualifying years to your NI record. This is also known as ‘topping-up’ your National Insurance.
You can make these top-up payments until reaching the full new State Pension – or until State Pension age. Whichever comes first would apply.
After the 5th of April 2016, each qualifying year of your NI record will add around £5.29 a week to your new State Pension. To calculate the exact amount you will get, you must divide £185 by 35. Then, you multiply it by the number of qualifying years after you reach retirement age.
Example: How the New State Pension is Calculated
Your starting amount from the National Insurance record before 6th April 2016 is £120 a week.
You add a further six (6) years to your National Insurance record after 5th April 2016. Each year adds about £5.29 a week to your State Pension. Thus, the extra six years that you have will add about £31.74 for a total of about £151.74.
Starting amount is More than the Full New State Pension
If your starting amount for the new State Pension is above £185.15 the extra amount is your ‘protected payment’. The protected payment amount gets added to your full new State Pension payment.
Note: Qualifying years after the 5th of April 2016 do not add extra money to your new State Pension payment.
No NI Contributions or Credits before 6th April 2016
The new State Pension rules are used to calculate your pension entitlements. In most cases, you need at least 10 qualifying years on your National Insurance record to receive any State Pension.
To get the full new State Pension you must have 35 qualifying years. Having somewhere between 10 and 35 years means you will get a proportion of the full new State Pension.
An Example: After the 6th of April 2016 (having reached retirement age) you have 20 qualifying years on your NI record.
Divide £185.15 by 35 then multiply by 20.
Using the new State Pension calculator this example would be approximately £105.80 per week.
This is the standard way for the new State Pension calculation if you are born after 2000. The same applies if you became a resident in the United Kingdom after the year 2015.
New State Pension Annual Increases
Each year the new State Pension increases by the highest of the following:
- Earnings: The average percentage increase of wages in Great Britain.
- Prices: The Consumer Prices Index (CPI) percentage growth in prices in the United Kingdom.
- 2.5%.
How to Get a New State Pension Statement
A State Pension statement will show how much of the new State Pension you may have entitlement to. The new government document ‘Your new State Pension explained‘ gives detailed information on the changes to the State Pension scheme.
ALSO IN THIS SECTION
The New State Pension: A section explaining the new State Pension rules and regulations.
National Insurance Record: How NI record and contributions determine eligibility at State Pension age.
Contracted Out: Check what happens if you were in a workplace, personal, or stakeholder pension.
Inheriting or Increasing: The rules for State Pension payments after the death of a spouse (or partner).
Living and Working Abroad: What happens to your new State Pension if you live and work overseas?