New state pension and current pension

Ensuring people have security in later life is a key priority for the Government. The basic State Pension has been 'triple locked' and as a result, between April 2011 and April 2016, the basic State Pension rose by £570 more than if it had just been uprated in line with average earnings. Universal benefits such as the Winter Fuel Payment have also been maintained. The new State Pension is not about spending more money; it is about making the system fairer and simpler. The reform puts pension expenditure on a sustainable footing and gives people clarity about what they will receive in retirement.
 
The new system does not simply mean a higher pension for some by virtue of date of birth. Under the old system there were two types of State Pension: basic and additional. Everyone with 30 years of National Insurance (NI) contributions got the basic State Pension. In addition, most people who paid the full rate of NI also accrued additional State Pension (sometimes called SERPS). Those people, therefore, were already receiving a higher State Pension. Many receive more than the £155.65 at which the new State Pension will start.
 
However, many people chose to 'contract out'. This means they paid lower NI to opt out of any additional State Pension, contributing instead towards a workplace pension. Under the new system, contracting out and the system of basic and additional State Pension have been abolished; there is now a simple, flat rate State Pension for everyone who has 35 qualifying years.
 
The end of contracting out means everyone is now paying the same rate of NI. Eventually that will mean everyone with 35 qualifying years will receive the same State Pension. A deduction will be made from the new State Pension for any years contracted out, to account for those who opted out of additional State Pension.
 
I hope this reassures you that the new system does not disadvantage current pensioners. The only people who will receive the full new State Pension are those who would have received a higher State Pension anyway, because of their contributions.