The Department for Work and Pensions (DWP) has released figures showing that the state pension currently supports almost 12.7 million older people in the UK.
To qualify for this benefit, which is available to those who have reached the state pension age of 66 for both men and women, individuals must have paid at least ten years of national insurance contributions. But as many people approach official retirement age this year, they may not realize that this premium is not automatically provided by the DWP and must be claimed or risk missing out on weekly payments of up to £221.20 .
The reason the money is not paid out once someone reaches state pension age is that some people choose to delay their claim to continue working and increase their pension savings, especially if they do not have the full 35 years of national insurance contributions Have contributed. are needed, or if they have been ‘outsourced’.
The DWP has issued guidance stating: “You will not receive your State Pension automatically – you must apply for it. You should receive a letter no later than two months before you reach State Pension age telling you what to do.”
To further clarify the process, the guidance notes that individuals can either claim their state pension or choose to defer (postpone) their claim. It adds: “If you want a postponement, you don’t have to do anything. Your pension is automatically deferred until you claim it,” reports the Daily Record.
This means that you will not receive payments if you do not respond to the letter confirming your wish to apply for state pension benefits. After all, the DWP will interpret a lack of response as a wish for delay.
Deferring your state pension can increase the payments you receive each week when you decide to claim it, as long as you defer it for at least nine weeks. Your state pension will increase by the equivalent of 1% for every nine weeks you defer, which works out to just under 5.8% for every 52 weeks.
The extra amount will be paid out of your regular state pension payment. However, it is crucial that you bear in mind that any extra payments you receive through deferral may be taxable. Read more on GOV. UK here.
It is also important to know that deferred state pensions increase every year in line with September’s Consumer Price Index (CPI) inflation and the highest benchmark of the Triple Lock policy.
New AOW benefit rates 2024/25
- Full payment rate: £221.20
- Each four-week pay period: £884.80
Rates of basic pension payments 2024/2025
- Full payment rate: £221.20
- Each four week pay period: £884.80
Your first payment
Your first payment will be made within five weeks after reaching the state pension age. After that, you will receive a full benefit every four weeks. You may receive part of a payment before your first full payment.
The letter explains what you can expect.
You can also choose to receive your AOW payments weekly or bi-weekly, which results in a shorter term for the first payment.
Your state pension payment day
The day on which your AOW is paid out depends on your Citizen Service Number.
The last two digits of your Citizen Service Number:
- 00 to 19 – paid on Monday
- 20 to 39 – paid on tuesday
- 40 to 59 – paid on Wednesday
- 60 to 79 – paid on thursday
- 80 to 99 – paid on Friday
DWP ‘starting amount’ for the new state pension
If you have eligible years on your National Insurance records as of 5 April 2016, DWP will calculate a ‘starting amount’ for you for the new State Pension.
It is the higher of the two:
- the amount you would have received under the previous AOW scheme up to 6 April 2016, or
- the amount you would receive based on your data up to April 6, 2016 if the new AOW had already been in effect at the start of your working life
Both amounts take into account periods in which you left the supplementary state pension. Your ‘starting amount’ can be lower, higher or equal to the full new state pension.
If your ‘starting amount’ is lower than the full amount of the new AOW
- For each ‘qualifying year’ you add to your National Insurance details after 5 April 2016, a certain amount (approximately £5.82 per week, this is £203.85 divided by 35) will be added to your ‘starting amount’, until you full amount of the new state pension or until you reach retirement age, whichever comes first.
As your ‘starting amount‘ is more than the full amount of the new AOW
- You will receive this higher amount when you reach state pension age. It is possible to get a starting amount that is higher than the full new AOW amount if you have an additional AOW amount. The difference between the full new AOW amount and your ‘starting amount’ is called your ‘protected benefit’.
If your ‘starting amount’ is equal to the full new AOW amount
- You will receive the full new state pension when you reach state pension age.
How can I find out how much state pension I can get?
You can get a forecast for your state pension online via the Check your State Pension service here. This provides personalized information including your state pension age, an estimate of how much state pension you can currently receive and whether you can increase this amount.
You can also view your national insurance premium history here. More information about postponing your AOW can be found on the GOV. UK website here.