Older state pensioners getting £2,797 less from DWP

Older state pensioners across the UK are getting up to £2,797 less in State Pension payments per year compared to younger retirees. The UK's State Pension system operates under two different schemes - basic and new - each of which are paid at different rates.It means that the age at which you reach retirement age affects how much money you get from the Department of Work and Pensions (DWP), with older generations missing out on an extra dose of cash. Men born before April 6, 1951, and women born before April 6, 1953, receive the basic State Pension, which is currently worth £176.45 per week if you get the full amount. But men and women born after these dates get the new State Pension instead which is worth £230.25 per week if you get the full amount - £53.80 more per week than older generations get on the basic State Pension.

So over a full year, those getting the basic State Pension can receive a maximum of £9,175.40 in pension payments, while younger pensioners on the new scheme can get up to £11,973 annually. As such, older generations are getting a whopping £2,797.60 less per year, even if they qualify for the full rate.

According to UK Parliament, an estimated 8.57 million pensioners were claiming the basic State Pension in the 2024/25 tax year, while only 4.38 million were new State Pension claimants. As the vast majority of pensioners get the basic State Pension, it means around 8.57 million are missing out on up to £2,797.60 annually compared to younger retirees on the new scheme.

But age isn't the only factor in determining which State Pension you get, with everyone who is eligible for the basic State Pension having already reached State Pension age, but how much money you get depends on your National Insurance record.

To get the full basic State Pension, men usually need 30 qualifying National Insurance years if you were born between 1945 and 1951, or 44 qualifying years if you were born before 1945.

By comparison, women usually need 30 qualifying years if you were born between 1950 and 1953, or 39 qualifying years if you were born before 1950. So if you get less than £176.50 per week then it means you have less than the full number of qualifying years.

Similarly, if you're on the new State Pension and get less than £230.25 per week, then you might need more National Insurance qualifying years to boost your weekly payments. You need at least 10 qualifying years on your National Insurance record to get any new State Pension and you usually need 35 qualifying years to get the full amount.

The State Pension rates increase at the start of every new tax year on April 6, with both pension schemes being uprated by 4.1% this year in line with the annual increase in the average weekly earnings index for May to July 2024, under the rules of the Triple Lock. But despite the rates increasing, older pensioners are still significantly worse off compared to younger generations on the new scheme.

The DWP said the new rates introduced in April this year will give pensioners on the new State Pension an extra £470 per year, whereas the basic scheme is only worth an extra £360 annually.

Commenting on the new rates earlier this year, the DWP said: "With uprating in effect, pensioners receiving the full basic State Pension will see their weekly payments rise from £169.50 to £176.45 per week, worth an additional £360 a year. In addition, the full rate of the new State Pension will increase from £221.20 to £230.25 per week, an increase of £470 a year."