Unwelcome surprise on single-tier pensions

The Department for Work and Pensions is sending out bad news to over 100,000 people.


Up to the April launch of the new single-tier state pension, the government publicity placed considerable emphasis on the amount of the new single-tier pension (£155.65 a week in 2016/17). However, the House of Commons Work & Pensions Select Committee was highly critical of the £155 focus when it examined the 'communication of the new state pension'. The Committee echoed a crucial point already made by pension professionals: in the early years of the new system the majority will not' receive the full amount.


Lower pensions


There are three groups who stand to suffer most because they could end up receiving less under the single-tier system than they would have got under the old regime, had it continued:


1. If you have a National Insurance contribution/credit record of fewer than 10 years by the time you reach your state pension age (SPA), then you will receive nothing from the single-tier pension regime. The Department for Work & Pensions has recently announced that it will be writing to over 100,000 people affected by this 10-year rule.


2. If your old regime pension entitlement relied upon your spouse's National Insurance contribution record, then this is no longer available to you. The basis of the single-tier pension is strictly personal, both in terms of contribution record and benefits there are no widow(er)'s pensions, other than in limited transitional circumstances.


3. If you were a member of a contracted out final salary scheme between 1978/79 and 1987/88, you would have accrued Guaranteed Minimum Pension (GMP) in place of SERPS. Once the GMP started to be paid, inflation proofing was the government's responsibility under the old regime. In the single-tier world, that inflation protection has been withdrawn.

These cuts in pension benefits stem from deliberate government decisions made in dealing with the complexities of switching from the old to the new regime.The best way to find out your single-tier pension entitlement is to obtain a projection from the Department for Work and Pensions website (, which will also tell you when you reach your SPA - it may not be when you think! Once you have got the projection, your next step should be to talk to us about your retirement options.