State pension UK: Starting payments may be reduced by certain private schemes – full list

Martin Lewis outlines pension scheme for 16-21 year olds

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State pension rules were altered in 2016 when a “new” system was put into place. While the new system has different rules on National Insurance contributions there were still likely to be many people who built up a record under the old rules.

As such, a “starting amount” was introduced to ensure retirees didn’t miss out.

A person’s National Insurance record before April 6 2016 is used to calculate the starting amount which is part of a new state pension.

A starting amount will be the higher of either:

  • The amount a person would get under the old state pension rules (which includes basic state pension and additional state pension)
  • The amount they would get if the new state pension had been in place at the start of their working life

However, this starting amount may also include a deduction if the claimants was in certain:

  • Earnings-related pension schemes at work (such as a final salary or career average pension) before April 6 2016
  • Workplace, personal or stakeholder pensions before April 6 2012

If a person held one of these schemes, they may have paid lower National Insurance contributions and paid into one of these pensions instead.

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This is known as being “contracted out” of the additional state pension and will affect most people who have been in work.

To check on this, claimants will need to contact their pension provider(s) to see if they were contracted out.

Additionally, a person can check their old payslips.

If they were contracted out, their National Insurance contributions line will have the letter D or N next to it.

Those who worked in the public sector are more likely to have been contracted out.

The Government details people who worked for the NHS, local councils or the police are more likely to be affected.

To be eligible for the new state pension a person will need at least 10 years of National Insurance contributions under their belt.

To receive the full amount of £179.60 per week at least 35 years will be needed.

State pensions can only be received by those who have reached the state pension age, which is currently sitting at 66.

However, it will be rising to 67 between 2026 and 2028.

Beyond this, it is expected to rise to 68 by 2046.

When a person is ready to claim their state pension, they can do so online, over the phone or through the post.

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