Millions not getting the maximum state pension amount

Our head of pensions and savings comments on official state pension figures.

The average weekly payment for 12.5 million people receiving a state pension was £159.81 in February this year, according to figures published by the Department for Work and Pensions this morning. Under the new state pension, the average was £168.40 and under the basic state pension system (pre-2016) it was £157.63 a week.  

The full weekly new state pension was £179.60 in February 2022 – so the actual amount received by pensioners on average was £20 a week lower than the headline figure. Those in receipt of the new state pension on average received almost £11 a week less. 

Around 2.5 million state pension recipients get the new state pension, 650,000 more than a year earlier. 

Overall, women receive less state pension than men, however the gap is less pronounced between men and women receiving the new state pension, compared with the gap under the old system. 

The average amount received by men under the new system is £170.49 compared with £165.45 for women of £165.45; meanwhile men receive an average of £172.71 and women £146.78 on the basic state pension. 

• Pension options at retirement

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Millions of people do not receive the full amount of state pension, perhaps because of gaps in their working lives where they did not benefit from National Insurance credits. You need at least 35 qualifying years to be eligible for the full state pension. 

“During this time of rising energy prices, which are disproportionately affecting pensioners who are largely dependent on the state pension, it’s important to remember that it’s normal for retirees to receive less than the full amount. This is especially true for women, who were more likely to take gaps from work when they were younger and therefore tend to have had fewer qualifying years under their belts.” 

“Although all pensioners on limited incomes are likely to struggle with rising costs, it is those who are entirely dependent on a less-than-full state pension, who will be particularly vulnerable to hardship as a result of rising energy bills this winter. 

“Those who receive less than the full amount of state pension should check what extra help may be available to them. For instance, they may be entitled to Pension Credit.” 

• To find out how many qualifying years of National Insurance credits you have built up, you can check your record here https://www.gov.uk/check-national-insurance-record.  
• If you have taken time out of work to care and are concerned this may have affected your NI entitlement, check whether you can apply for National Insurance credits. In some cases, it may be possible to backdate these. It is particularly important for women who have taken time out of work for childcare and not claimed child benefit to fill out the child benefit form to protect their eligibility for credits.  
• You can apply for National Insurance credits here: https://www.gov.uk/national-insurance-credits
• Apply for Pension Credit here: https://www.gov.uk/pension-credit/how-to-claim
• When calculating what you need to live on when you retire, remember that the state pension is likely to make up a large proportion of your income. Whatever you have saved privately will sit on top of this.  
• You will need to calculate what annual income you are likely to receive from your pension pot either by using drawdown or buying an annuity. You can use a drawdown calculator, like this one from interactive investor https://www.ii.co.uk/ii-accounts/sipp/pension-drawdown-calculator
• The two income amounts added together – state pension and any private pension savings converted from a total pot to an annual income amount, is what you can expect to live on in retirement. 
• Remember that the state pension eligibility age is currently 66 and set to rise to 67.