UPDATED for the 2025/26 tax year. All rates are those paid from 7 April 2025.
More than a million people who
reach state pension age in the years from 6 April 2016 will not get the full amount of the new ‘flat-rate’ state pension - currently £230.25 from 7 April 2025.
But many of them could boost their
pension towards or up to the full flat rate amount.
This guide is for men and women born 6 January 1954 or later who paid into a good pension
at work or, in some cases, into a personal pension.
It is complicated - don't blame me I didn't invent the rules! But please persist, as it could make you better off for the whole of your retirement.
There are other groups who may not get the full new state pension because they have paid less than 35 years of National Insurance contributions. They may be able to boost their state pension by paying extra contributions now. This piece does not cover that issue. Use the links at the end.
NEW STATE PENSION
The new state pension was supposed to be simple. A flat-rate amount for
everyone who had at least 35 years of National Insurance contributions. This
year 2025/26 that amount is £230.25.a week (£11,973 a year) and is taxable. However, there are around one
and a half million people who will reach pension age between 2016/17 and 2026/27 who will
get less than that even if they have 35 years or more National Insurance
contributions.
That is because an amount is deducted from the new state pension for every year
they paid into a good pension at work. I call it a contracted out deduction because they were ‘contracted out’ of part of the state pension called SERPS or
State Second Pension (S2P). They paid lower National Insurance contributions
and instead of that additional state pension they get a pension from their job
which was supposed to replace it. The Government prefers to call it 'Contracted Out Pension Equivalent' or COPE. It is that COPE amount that is deducted from your new state pension.
This group includes most people who worked in the public sector, such
as
- nurses, doctors, and others in the NHS
- teachers in schools and universities
- police officers and fire brigade staff
- civil servants
- local government workers
- armed forces
- Post Office workers
It also includes many people who worked for one of the privatised
industries such as British Airways, British Rail, British Steel, and Royal Mail.
Another large group affected are people who worked for a private sector employer who paid into a good scheme at work that promised them a pension related to their salary. They used to be called ‘final salary’ schemes and nowadays are called Defined Benefit or DB schemes. In the past many large firms ran such schemes. There are still more than 5000 of them and if you paid into one at any time from 1978 your new state pension will be reduced.
Another large group affected are people who worked for a private sector employer who paid into a good scheme at work that promised them a pension related to their salary. They used to be called ‘final salary’ schemes and nowadays are called Defined Benefit or DB schemes. In the past many large firms ran such schemes. There are still more than 5000 of them and if you paid into one at any time from 1978 your new state pension will be reduced.
Also included are some people who paid into a personal pension and who
were persuaded to contract out of part of the state scheme – at the time it was
normally called ‘contracting out of SERPS’.
For all these people their new state pension will be reduced to take account of the
years they paid into a contracted out pension scheme. That deduction applies
even if they have paid the 35 years which is needed to get a full pension – the
deduction is made after the full pension is worked out. It can also apply even
if they were contracted out for a short period and paid in 35 years or more when
they were not contracted out. These deductions can be very large but normally can
never leave you with less than £176.45 a week which is the amount of the old basic state pension.
Please do not ask me why that is fair! It may not be fair, but it is the
law. The good news is that you can reduce that deduction and, depending on your
age and the amount deducted, you may be able to boost your pension towards the full flat-rate of £230.25, though at the moment the maximum bost falls a little short of that.
THE DEDUCTION
THE DEDUCTION
If your new state pension has an amount deducted from it because you
spent some time paying into a good pension scheme at work then you can reduce
that deduction or even wipe it out. It will help even if you already have 35 years of National Insurance contributions
or more.
If your new state pension is reduced because you paid into a good
pension scheme at work then every year of National Insurance contributions you pay or have credited from
2016/17 to the year before the tax year in which you reach state pension age - currently 66 for everyone - will mean that deduction is less.
If you work and earn more than £125 a week you will get contributions
credited or paid to your account (you start actually paying for them when you
earn above £242; under that they are credited). If you get child benefit
for a child who is less than 12 years old then you will also get a credit for each week.
If you get universal credit, jobseeker’s allowance, employment and support allowance, or working
tax credit then you will get a credit for each week you get that benefit. You can
also get credits if you are a carer in some circumstances. Check here for more details of who can get credits. Some are given automatically, others have to be claimed.
If you are self-employed then up to 2023/24 you paid what are called Class 2 National
Insurance contributions if your profits were £12,570 or more. They were £3.45 a week (£179.40 a year). If your profits are between £6725 and £12,750 you will be given a credit. If your profits are up to £6724 you can pay these contributions voluntarily - but only for years in which the were genuinely self-employed. In previous years there were no credits paid and the threshold for paying was just below £6845 a year.
If you will not pay National Insurance contributions at work or as
self-employed or get credits for them then you can pay voluntary contributions,
called ‘Class 3’. They will cost you £17.75 a week (£923 for a year). For
each extra year of contributions your pension will be boosted by £6.58 a week
(£342.09 a year) so the payback is rapid – two years and seven months for non-taxpayers; nearly three and a half if you pay basic rate tax; four and a half for higher rate taxpayers,
and nearly five for top rate 45% taxpayers.
A special concession on rates and backdating ended on 5 April 2025.
The new state pension was increased to £230.25 a week from 7 April 2025 rising according to the triple lock of earnings, prices, or 2.5%. Earnngs rose most so the pension rose with them by 4.1%.
If you have paid some contributions at work or as self-employed during
the tax year but you are short of a full year you can pay individual weeks
through Class 3 (or Class 2) to make your record up to a full year.
You can only pay Class 3 contributions for the years before the tax
year in which you reach state pension age. That limits the number of years you
can pay to boost your pension. The table show which years you can pay Class 3 contributions to set against the contracted out deduction and the maximum boost that should give to your pension. Your pension cannot be boosted to more than £230.25 a week and it will not ever be reduced to less than £176.45. But the maximum boost availalbe is £46.05.
BOOSTING A NEW STATE PENSION THAT IS SUBJECT TO A
CONTRACTED OUT PENSION EQUIVALENT (COPE) DEDUCTION
|
Reach State Pension Age in |
|
|
Years you can pay |
Maximum pension boost (2025/26 rates) |
||
|
| ||||||
|
Men and women born |
||||||
|
2019/20 |
from 6 January 1954 |
to 5 July 1954 |
1 |
£6.58 |
||
|
2020/21 |
from 6 July 1954 |
to 5 April 1955 |
2 |
£13.16 |
||
|
2021/22 |
from 6 April 1955 |
to 5 April 1956 |
3 |
£19.74 |
||
|
2022/23 |
from 6 April 1956 |
to 5 April 1957 |
4 |
£26.31 |
||
|
2023/24 |
from 6 April 1957 |
to 5 April 1958 |
5 |
£32.89 |
||
|
2024/25 |
from 6 April 1958 |
to 5 April 1959 |
6 |
£39.47 |
||
|
2025/26 |
from 6 April 1959 |
to 5 April 1960 |
7 |
£46.05 |
||
NEXT STEPS
You can only pay voluntary Class 3
contributions in the current tax year or the six years before that. A concession that allowed earlier gaps to be filled ended on 5 April 2025.So from 6 April 2025 the earliest year you can pay is now 2019/20.
If you will reach state pension age in 2025/26 you may want to act soon
to see if you can boost your pension by paying National Insurance contributions
for the six years 2019/20 to 2024/25. That could give you an extra £46.05 a week on your pension.
The Government has introduced a new service to help you check your state pensioncheck your state pension and boosting it. Sadly it only works for people under state pension age. Even those within four months of pension age cannot use it. Instead you should phone the DWP’s Future Pension Centre on 0800 731 0175 and ask
for help or advice about paying extra contributions. Have your National Insurance number with you. Ask what your ‘starting amount’ is and ask if there is a
deduction for being contracted out. If your starting amount is less than £230.25 and
there is a contracted out deduction then you may be able to boost it using the
information in this guide. 'Starting amount' is explained in the notes below. If you have a deduction for a pension which you cannot trace use the Government's free Pension Tracing Service.
In the past, many people have contacted the DWP and been told they cannot boost their pension because they already have 35 years or more of contributions. That is incorrect. Some officials seem to be confusing this scheme with one to fill gaps in your contribution record. Others have been told that they need more than 35 years to get a full pension. That can be true in the circumstances in this blogpost, but it is a confusing way to put it.
You may get more sense from the free and excellent Money Helper website or call on 0800 011 3797. Beware of similar sounding commercial organisations.
You can check your starting amount at this Government website. You will have to go through security procedures which can be a pain. Make sure
it includes your 2015/16 contributions. This website may let you see how
you can boost your pension by paying extra National Insurance contributions.
NOTES
1. All the rates in this guide are correct in 2025/26.
2. If your income is low then you may get extra money from pension
credit or help with your council tax or rent (rent or rates in Northern
Ireland). If you buy Class 3 contributions to boost your pension those benefits
will be reduced but it will almost always still be worthwhile.
3. Your ‘starting amount’ is the calculation of how much state pension
you have built up at 6 April 2016 under the old and the new rules. Your
starting amount is the one that is bigger. It will take account of National
Insurance contributions paid up to 2015/16 and will also make a deduction for
years you have been ‘contracted out’ of part of the state pension system called
SERPS.
4. SERPS, the State Earnings Related Pension Scheme, was an earnings-related
supplement to the basic state pension. People paid into it as part of their National
Insurance contributions from April 1978 to April 2016. From April 2002 it was changed
and renamed State Second Pension (S2P). It was SERPS and S2P – officially called
‘additional pension’ – which people ‘contracted out’ of if they paid into a
good pension at work or in some cases into a personal pension which they chose
to ‘contract out’. They paid lower National Insurance contributions. The
pension they paid into was supposed to replace the SERPS or S2P but it does not
always do so in full.
5. Tax years run from 6 April one year to 5 April the next. So 2025/26 runs from 6 April 2025 to 5 April 2026.
6. If you have an old company or personal pension you cannot trace, use the Government's free Pension Tracing Service.
7. Contracted Out Pension Equivalent (COPE) is the amount deducted from your new state pension to take account of the time you were contracted out of SERPS/S2P. In theory the amount deducted should be paid to you by the pension scheme you paid into as part of being contracted out. But that will not always happen especially if you were contracted out into a personal pension. This government guide to contracting out sort of explains it.
BOOST YOUR PENSION GUIDES FOR OTHER GROUPS
Men born 6 April 1951 or later
and women born 6 April 1953 or later.
Men born before 6 April 1951 and
women born before 6 April 1953
·
Version: 8.0
9 April 2025
Previously: Target 203, Target 155, Target 164, Target 169, Target 175, Target 179, Target 185
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