What You Need to Know
Understanding how the latest changes affect your retirement income.
For millions across the UK, the State Pension is a vital source of income in later life. While many people also rely on private pensions and savings, the State Pension provides a reliable foundation – one that is adjusted each year in line with government policy.
With updates confirmed for the 2025/26 tax year, now is a good time to review what’s changing, how it could affect your finances, and what steps you can take to get the most from your entitlement.
What’s New for 2025/26?
From April 2025, the full rate of the new State Pension will be £230.25 per week, while the old basic State Pension will rise to £176.45 per week. These increases follow the triple lock mechanism – ensuring pensions rise each year by the highest of:
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Average wage growth
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Inflation (CPI)
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2.5% minimum
This ongoing commitment aims to help pensioners keep pace with the rising cost of living.
Who Gets the New State Pension?
If you reach State Pension age on or after 6 April 2016, you fall under the new system. To qualify:
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You need at least 10 qualifying years of National Insurance (NI) contributions.
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You usually need 35 qualifying years to receive the full new State Pension.
Not sure how many years you have? You can check your NI record online at gov.uk.
State Pension Age – Any Changes for 2025?
The State Pension age remains at 66 throughout 2025, though this will begin increasing to 67 between 2026 and 2028.
If your birthday falls during that transition, your pension age may change – use the government’s State Pension Age Checker online to confirm your personal retirement date.
How to Build or Boost Your NI Record
Your State Pension is based entirely on your NI record. Here are ways to make sure you’ve covered your bases:
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Working? You’ll likely pay NI through your salary.
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Self-employed? You’ll pay Class 2 or 4 NI based on profits.
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Claiming certain benefits (like Child Benefit)? You might get automatic NI credits.
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Missing some years? You may be able to buy voluntary Class 3 contributions – usually covering gaps going back up to six years (sometimes further if the government extends deadlines).
Important for 2025: If you’re missing NI years, this year may still be within the window to top them up. But topping up doesn’t always boost your pension, especially if you already qualify for the full amount – seek guidance before paying.
Can You Defer Your State Pension?
Yes – and doing so could increase your payments. If you defer:
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Your weekly pension goes up by just under 5.8% for each full year of delay.
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There’s no cap on how long you can defer, but you must delay for at least nine weeks to see any increase.
Before deferring, weigh up the pros and cons, especially in relation to your life expectancy, current income, and tax situation.
Key Financial Considerations for 2025
The State Pension update this year may have knock-on effects for your broader finances:
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Inflation impact: While the pension increase helps, energy bills and food prices may still erode your spending power.
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Benefits thresholds: A higher pension could affect eligibility for things like Pension Credit or Housing Benefit.
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Tax brackets: Your State Pension counts as taxable income. If it pushes your total income over the personal allowance, you might owe more tax.
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Private pension interactions: If you have other pensions or part-time work, make sure you review your full income picture.
How to Stay on Top of Your Pension
Here’s what you can do right now to take control:
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Check your forecast: Visit gov.uk/check-state-pension to see how much you’re on track to receive.
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Review your NI record: Spot any gaps early, and look into whether they can be filled.
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Explore NI credits: Particularly if you’ve taken time out to care for children or relatives.
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Consider voluntary contributions: But only after checking whether they’ll actually increase your future payments.
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Follow official updates: Keep an eye on changes to deadlines or eligibility rules.
Why It Pays to Stay Informed
State Pension rules can shift with each new budget or Parliament session – especially around:
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The triple lock guarantee
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The State Pension age
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Eligibility rules or contribution calculations
Staying updated through gov.uk, Citizens Advice, or Pension Wise can help you make informed decisions. Even small steps – like filling one gap in your NI record – can make a big difference in retirement.
In Summary
The 2025/26 tax year brings another increase to the State Pension – offering reassurance to millions, but also prompting questions around entitlement, income tax, and financial planning.
If you’re nearing retirement, now is the time to:
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Confirm your State Pension age
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Check your NI history
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Think about voluntary top-ups
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Review how the State Pension fits into your overall retirement income
Need advice on your State Pension or retirement planning? Get in touch with the team at Porter Garland Chartered Accountant – we’re here to help you make the most of what you’re entitled to.