4 key facts you need to know about your State Pension before you retire

When you think about your financial future, there’s a chance you may assume that your private pensions will supply you with the majority of your retirement income.

However, this isn’t necessarily the case, as research from Scottish Widows reveals that the State Pension is the main source of income for 33% of retirees.

Even though you may have accrued a considerable sum in your workplace or private pensions and plan to primarily live on this, the State Pension can still form the bedrock of your retirement income.

So, to ensure you know exactly what you’re entitled to and how it works, continue reading to discover four key facts about the State Pension.

1. You can start claiming when you reach your State Pension Age

While you can normally access your private pension once you reach the age of 55 (rising to 57 by 2028), it’s vital to note that the State Pension Age differs somewhat.

As of 2024/25, both men and women can start claiming the new State Pension at the age of 66. Just remember that the government plans to raise this to 67 between 2026 and 2028, then again to 68 between 2044 and 2046.

While these State Pension Age changes might seem distant, they could have significant implications for your retirement planning, as some experts suggest that future increases could continue as life expectancies rise.

For instance, the International Longevity Centre, which tracks the effects of rising life expectancies and falling birth rates, argues that the UK will have to increase the State Pension Age to 71 by 2050 to keep costs sustainable.

Even though this is still just speculation, it shows how important it is to stay informed about any State Pension Age changes when you’re planning your retirement.

2. The “triple lock” ensures that the State Pension increases in value each year

Introduced by the Conservative-Liberal Democrat coalition government in 2011, the State Pension “triple lock” is a measure designed to ensure that your entitlement retains its real-term value over time.

Each year, the State Pension typically rises in line with the highest of three factors:

• Inflation (as measured by the Consumer Prices Index in September of the previous year)
• The average increase in wages across the UK, measured year-on-year
• 2.5%.

In the 2024/25 tax year, the full new State Pension is worth £221.20 a week. Thanks to the triple lock, this is set to rise by 4.1% in 2025/26 in line with wage increases, bringing your weekly entitlement to £230.25 a week – an extra £472 a year.

It’s worth noting that the triple lock was temporarily suspended in 2022/23 due to artificially high wages after the government’s furlough scheme during the Covid-19 pandemic.

Though, in her recent Budget in October 2024, chancellor Rachel Reeves confirmed the government’s commitment to the triple lock.

This could help ensure that your State Pension entitlement increases in line with the rising cost of living and remains the bedrock of your retirement income, even if costs continue to rise over time.

3. You can defer your State Pension

An interesting aspect of the State Pension that you might not have considered is that you can choose to defer it. While this might sound counterintuitive, doing so could have some helpful benefits.

For instance, for every nine weeks you defer your State Pension, it typically increases by 1%, equating to an increase of roughly 5.8% a year. If you defer it for a full year, this could mean you would receive an extra £667 a year.

Several personal factors are likely to influence your decision about whether to defer your State Pension, such as your health, life expectancy, and other sources of retirement income.

If you can comfortably support yourself and your loved ones with other sources of income in the short term, then deferring your State Pension could be a suitable choice.

Though, it’s important to keep in mind that you will miss out on an annual income that could take some time to make up with the deferred increase.

Indeed, MoneySavingExpert reveals that to receive the extra £667, you’ll have given up £11,500 in State Pension that you could have claimed in the first year, and you would need to live for around 20 years after receiving your entitlement to even out the amounts.

This is why assessing your individual circumstances with your financial planner could help you determine whether deferring the State Pension is a practical choice for you.

4. You may be able to boost your State Pension entitlement, and there is currently an extended deadline for doing so

To qualify for the new full State Pension, you must have accrued enough NI credits on your record – at least 10 qualifying years for any State Pension at all, or 35 qualifying years for your full entitlement.

You can typically earn these credits through:

• Paying NI on your employed earnings
• Making voluntary NI contributions (NICs)
• Receiving NI credits while off sick, claiming unemployment benefits, or caring for a relative.

If you have gaps in your NI record, it might be worth topping it up to ensure you receive all you’re entitled to.

You can typically buy credits to cover gaps from the past six years. Crucially, until April 2025, you can purchase credits dating back as far as April 2006 provided you reached or will reach State Pension Age after 2016.

Standard Life reveals that purchasing a full year of Class 3 voluntary NICs from between 2006 and 2023 (which currently costs £824.20) could boost your State Pension by £275.08 a year.

If you begin receiving your State Pension at 66 and live for another 20 years, this relatively small investment could add roughly £5,500 to your total retirement income.

As such, reviewing your NI record now to identify any gaps before the deadline could have a significant effect on your retirement income.

Your financial planner could assist you with understanding the best way to top up your NI record, boosting your State Pension income for a more financially secure retirement.

Get in touch

We could help ensure that you fully understand your State Pension entitlement, allowing you to accurately plan for your future.

Email us at info@harperlees.co.uk or call 01277 350560 to find out more and we’ll be more than happy to help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.