Only around half of those receiving the new state pension last year were getting the full weekly amount, with approximately 150,000 pensioners receiving less than £100 per week, a new analysis shows.
Royal London found that 1.7 million out of 3.4 million people on the new state pension received the full amount in the past year, based on data from the Department for Work and Pensions (DWP) as of spring 2023.
The full state pension for 2024/25 is £221.20 per week, up from £203.85 last year. To qualify, individuals generally need 35 years of National Insurance contributions (NICs). Those with fewer qualifying years receive a reduced pension.
The analysis also revealed that 149,317 pensioners who reached state pension age after April 2016 were receiving less than £100 a week, with 17,546 receiving under £20, and 5,677 getting less than £10 weekly.
The new state pension system, introduced in 2016, was designed to provide a clearer and more sustainable foundation for retirement savings.
Despite this, many pensioners still rely heavily on their state pension, with a Royal London survey indicating that one in five people aged 66 and over live on the state pension alone.
For those on low incomes, Pension Credit is available to top up their earnings, but the DWP estimates that up to 880,000 households eligible for this support have not yet claimed it. An awareness campaign has recently been launched to encourage more people to apply.
However, the Government also announced that around 10 million pensioners will lose out on winter fuel payments, restricting the benefit to those receiving Pension Credit as part of a package to address a £22billion budget shortfall.
Pensioners with gaps in their NIC record may be able to increase their retirement income by making additional contributions.
Sarah Pennells, consumer finance specialist at Royal London, said: “We often talk about the full state pension amount, but these figures show how many pensioners are getting only a fraction of that.
“One of the main reasons why people miss out on the full state pension is because they have gaps in their national insurance record, but they may not realise this until it’s too late to do anything about it.
“You may have national insurance gaps because, for example, you were working but had low earnings, were unemployed but didn’t claim benefits, were a high earner with young children who didn’t register for child benefit, or because you were working abroad.”
However, Ms Pennells noted: “The good news is that even if you have gaps in your National Insurance record going back over a decade, it may still be possible to top up your contributions and increase the amount of state pension you’re entitled to.”
She added that some people may be eligible for free National Insurance credits, particularly if they are caring for a child under 12 or someone receiving certain benefits.
Ms Pennells urged people to act before the April 5, 2025, deadline to make voluntary contributions for gaps between April 2006 and April 2018. After that date, individuals will only be able to fill in gaps from the past six years.
A DWP spokesperson added, “Ensuring a better deal for the pensioners of today and tomorrow is a priority for this Government. There are various reasons why some pensioners have a lower state pension, which is why we encourage those on the lowest incomes to claim Pension Credit.”
With the Government’s commitment to the triple lock, over 12 million pensioners are expected to see their state pension increase by around £1,000 over the next five years.
