DWP state pension alert as millions to lose out on £471 increase in April | Personal Finance | Finance
Millions of pensioners may face a reduced income boost in April, as those receiving the ‘basic’ state pension will see a smaller increase than their ‘new’ state pension counterparts.
The state pension will rise by 4.1% on April 6 under the “triple lock” guarantee. This ensures state pensions rise each April in line with the highest of three measures: average earnings growth between May and July, CPI inflation in September, or 2.5%. While this will provide a £471 boost to those eligible for the full ‘new’ state pension, the rise will be much smaller for those who only qualify to receive the ‘basic’ state pension.
A 4.1% increase will raise the full ‘basic’ state pension from £169.50 per week (£8,814 per year) to £176.45 per week (£9,175.40 per year), resulting in an annual increase of £361.40.
This reflects a sizeable £108 difference to those who receive the full new state pension, who will see their payments rise from £221.20 per week (£11,502 per year) to £230.25 per week (£11,976 per year), reflecting a £473.60 annual increase.
The ‘basic’ state pension applies to men born before April 6, 1951 and women born before April 6, 1953. This means that men receiving the ‘basic’ state pension must be at least 74 and women at least 72.
Recent figures show there were approximately 12.7 million pensioners in the UK in May 2023, and around nine million are considered to be over 70. This highlights a significant proportion of older adults affected by the disparity in pension increases.
Pensioners who qualify for the basic state pension can also qualify for an “additional” state pension, also known as the State Earnings-Related Pension Scheme (SERPS), which may provide them with some extra financial support.
However, many of these pensioners may still experience a limited overall income boost due to the smaller increase in the basic state pension.
Andy Wood, international tax consultant at Tax Natives, said: “While the increase is helpful, the disparity between the two [state pension] systems remains a challenge, especially for those who retired under the older scheme.”
It’s important to remember that the amount of your state pension depends on your National Insurance record. Most people need 35 qualifying years to receive the full new state pension, while at least 10 years are required to qualify for any pension at all.
People may be able to boost their state pension payment rates if they find they are missing “qualifying years” in their National Insurance records. These are accumulated through active employment or by receiving NI credits. NI credits are granted during unemployment, illness, or while fulfilling parental or caregiving responsibilities.
Those who have gaps, which may have occurred when credits weren’t claimed, can increase their state pension by purchasing additional NI years.
HM Revenue and Customs (HMRC) and the DWP offer an online state pension forecast service to help people calculate if they’ll benefit from making voluntary contributions.
However, making this check is becoming increasingly urgent, as the deadline to fill gaps dating back to 2006 lands on April 5, 2025. After this date, people can only make contributions for the previous six tax years, potentially losing thousands of pounds.
In a new post on social media platform X, the Department for Work and Pensions (DWP) wrote: “Don’t miss out on your State Pension entitlement. The 5 Apr 2025 deadline for paying voluntary National Insurance contributions to fill any gaps between 2006 and 2018 is approaching.”