Department for Work and Pensions
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Millions stand to gain from the new State Pension

The new State Pension being introduced in April 2016 will make millions of people better off.

The introduction of the new State Pension in April will make millions of people better off, according to new figures released yesterday (14 January 2016).

The data shows the long-term impact of the new State Pension on people’s pensions, with 75% of people set to gain in the first 15 years.

The move to the new system will provide a boost to the State Pension for many women, with over 3 million women receiving an average of £11 more per week by 2030 as a result of the changes – helping to address the gender inequalities that have persisted under the old scheme.

Minister for Pensions, Baroness Altmann said yesterday:

Huge efforts have been put into reforming the mind-blowingly complicated State Pension system that exists today into something that, over time, will be clearer for everybody.

Millions stand to gain from the changes to the new State Pension, including women and the self-employed, who so often lost out in the past.

These figures also show that over 70% of people who have been contracted-out during their working lives stand to gain from the new State Pension.

The figures reveal that 90% of people who will pay National Insurance (NI) at the standard rate from April, due to the end of contracting out, will receive enough extra State Pension over their retirement to offset the increase in these NI contributions.

Anyone aged 55 or over can apply for a personalised State Pension Statement, which will give them an estimate of what they will get under the new system. This will be based on their work history and NI contributions to date, including information on their past contracting out record.

More information

The statistics can be found here:

New State Pension: impact on an individual’s pension entitlement – longer term effects

The statistics also show that over 75% of women and over 70% of men will gain in the first 15 years of the new State Pension.

Women reaching State Pension age over the next 5 years will receive, on average, approximately £190,000 of State Pension over the course of their retirement. The equivalent figure for men is approximately £170,000.

Background on the New State Pension

At the heart of the new State Pension is the concept of a clearer, single payment for the future. The full rate will be above the basic means-test in Pension Credit, but the system will remain contributory in nature.

Many of the complexities which have built up over decades will be swept away and, after April, there will be a much more straightforward system. People making NI contributions for the first time from April who have 35 qualifying years of NI contributions will receive the full rate, which will be set above the basic level of means-tested support (currently £155.65 a week, that is over £8,000 a year).

The system will still recognise the NI contributions made by those who have spent some of their working life in the old system. This will involve the DWP calculating a “starting amount” for the new State Pension taking into account a person’s record up to April 2016. The starting amount will be the higher of the State Pension built up under the old rules or the amount each person could have built up if the new system had been in place in the past.

Starting amounts for the new State Pension will take into account whether someone has been contracted-out in the past as well as their past earnings and overall NI contribution record.

In future, the option for people to “contract out” of the Additional State Pension (and pay NI contributions at a reduced rate) will be removed, and there will be only one NI rate for employees.

As a proportion of GDP, projected expenditure on pensions and pensioner benefits is broadly the same as under the current system until the 2040s.

More information about the new State Pension is available at

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