The state pension went up 4.8 per cent this month. We all pay for it, and most expect to get it one day. For many, it is the bedrock of their retirement planning. <\/p>\n
But is everything we think we know about it really true? Should we be putting it at the heart of our financial futures? We look at some of the most common pension misconceptions \u2014 good and bad \u2014 and see which myths need busting.<\/p>\n
The myth: there\u2019s a pot of money with your name on it<\/p>\n
Many describe the state pension as a benefit, akin to universal credit or child benefit. Others say it is not a benefit, because we pay for it ourselves through national insurance contributions. If you don\u2019t have the full 30 years\u2019 worth of contributions, you won\u2019t get the full state pension, worth \u00a3241.30 a week or \u00a312,582 a year.<\/p>\n
It is funded by the working-age population and, under the 1946 National Insurance Act, it is legally classed as a benefit. It is an expensive part of the welfare system, costing \u00a3110.5 billion in 2022-23 \u2014 just under half the benefits bill. This tax year, it is forecast to cost \u00a3158.4 billion. \u00a0<\/p>\n
So, what does the fact that it is technically a benefit mean? Well, according to Tom Selby from the wealth management firm AJ Bell, it means that nothing about it is guaranteed. \u201cVarious legal challenges have determined that the state pension is a benefit, meaning that it can and inevitably will be subject to future changes,\u201d he said.<\/p>\n
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Despite those national insurance contributions leaving your payslip every month, there is no dedicated state pension pot waiting for you when you retire. This is because there is no big static pot of money that is used to fund state pension payments \u2014 the money comes from the national insurance contributions of today\u2019s workers and employers. They fund the pensions of the retired, rather than you paying for your own retirement pot.\u00a0<\/p>\n
But with falling birth rates (the 1.41 children per woman rate in 2024 was the lowest on record) there could be fewer taxpayers around to pay the pensions of those who are working now, once they get to retirement. Figures from the Centre for Social Justice, a think tank, suggest that this demographic cliff edge means that the state pension age would need to hit 75 to maintain today\u2019s worker-to-pensioner ratio.\u00a0<\/p>\n
Verdict: not true<\/p>\n
The myth: everyone gets the same amount<\/p>\n
From the 1940s until the 2010s, the state pension age was 60 for women and 65 for men. This disparity was phased out, with women\u2019s pension age brought up to 65 by 2018, and then both ages raised to 66 by 2020. And it isn\u2019t stopping there \u2014 the state pension age will be 67 by March 2028, and is due to go up to 68 between 2044 and 2046, although that rise could come earlier.<\/p>\n
The state pension was overhauled and simplified in 2016. Those on the new state pension get the maximum of \u00a3241.30 a week if they paid 30 years of national insurance contributions. You need to have made ten years of contributions to get any pension at all. <\/p>\n
Those on the old basic state pension get a maximum of \u00a3184.90 a week, but many qualify for the old, complicated, additional state pension on top of this.\u00a0<\/p>\n
If you spent time out of work raising children, were ill or unemployed, you can get national insurance credits to replace contributions. These will help prevent any gaps in your record, and claims to fill contributions can go back six years. Anyone living and working abroad can pay voluntary contributions \u2014 again you can fill in those gaps for up to six years.\u00a0<\/p>\n
Those in retirement on low incomes can claim pension credit to top up their state pension if they do not qualify for the full amount. This can bring weekly income up to \u00a3238 if you are single, or \u00a3363.25 for a couple. You can also get extra money if you have a severe disability or care for another adult, child, or disabled person, as well as money to help with housing costs.<\/p>\n
The state pension is paid every four weeks (not monthly \u2014 meaning you will usually have 13 payments a year) and the day of the week you are paid depends on the last two digits of your national insurance number.\u00a0<\/p>\n
It is also not paid automatically. You usually get an invitation letter four weeks before you reach state pension age, but you then have to apply, either online or by calling the Pension Service on 0800 731 7898. If you do not claim it, the amount you would have been paid is automatically deferred. <\/p>\n
If you defer for a year, any payments after that will be 5.8 per cent higher. It will take about 15 years for the 5.8 per cent boost to cover the year of missed payments, so it would only be worth deferring if you were in good health.<\/p>\n
Verdict: not true<\/p>\n
The myth: the state pension won\u2019t be around when I retire<\/p>\n
Young people often fear that there won\u2019t be a universal state pension by the time they retire. They worry that future governments could slash payments, apply means testing, or simply abolish it altogether. But is this likely?<\/p>\n
When the first state pension was introduced in 1908 it was only available to those on low incomes. It was not until 1948 that it became available to the whole population. In countries such as Australia you get still less from the state if you have private savings.<\/p>\n
The state pension is protected by the triple lock, which guarantees that payments go up every year in line with inflation, wages or 2.5 per cent, whichever is higher. The lock is politically popular, particularly (and unsurprisingly) among older voters \u2014 a powerful voting bloc. Some 74 per cent of over 65s vote compared with 47 per cent of 18 to 24-year-olds, according to government figures.<\/p>\n
Any changes proposed by the new pension commission, which was launched in 2025 to look at retirement options and the adequacy of savings, would require at least a decade of notice, according to Susan Hope from the pension firm Scottish Widows.<\/p>\n
\u201cFor anybody who is 55 plus, there\u2019s going to be no change. And even then, I think it\u2019s more likely to be an evolution than anything else. I don\u2019t think it will be removed,\u201d she said.<\/p>\n
Verdict: who knows?<\/p>\n
The myth: You can live off a state pension<\/p>\n
The industry body Pensions UK estimates that someone living alone needs \u00a313,400 a year, after tax, for a minimum standard of living in retirement. This assumes that you have no housing costs and is marginally higher than the \u00a312,548\u00a0full new state pension. <\/p>\n
Hope said that the minimum standard of living really only covered the basics: \u201cIt\u2019s a life of staying at home, no car, no foreign holidays, a short weekend break in the UK every year.\u201d <\/p>\n
Scottish Widows research from 2025 suggests that 39 per cent of people aged between 22 and 65 are on track for even less than this minimum lifestyle in retirement, particularly the self-employed or younger workers with defined contribution pensions. These pensions are most common in the private sector and have no fixed payout \u2014 it depends on how much is paid in and how investments perform.<\/p>\n
\u201cAnyone hoping that the state pension will deliver a comfortable retirement income on its own needs a serious reality check,\u201d said Selby.\u00a0Instead, it is best to think of it as a foundation for your retirement income.<\/p>\n
\u201cThe state pension is designed to provide for basic needs so people are less likely to fall back on the state in their later years, and no more,\u201d he said.<\/p>\n
Verdict: not true, if you want to be comfortable<\/p>\n
The myth: the new state pension is better than the old<\/p>\n
As the years go by, the average pension paid out under the new system will be lower than it would have been under the old system. This is because, if the old scheme had continued, more people would have benefited from earnings-related additional state pension payments \u2014 the maximum additional payments could more than double a state pension.<\/p>\n
The old system was also more generous for those who deferred their pension, rewarding them with an extra 10.4 per cent per year of deferral compared with 5.8 per cent under the new system. It also allowed for widows or widowers to get some of their partner\u2019s pension after they died, which the new system does not offer.<\/p>\n
Steve Webb, a former pensions minister who is now a partner at the consultancy LCP, said: \u201cThe new state pension system is a lot simpler than the old system, but it is not more generous overall.\u201d<\/p>\n
While it is true, he said, that some groups do better under the new system \u2014 the self-employed, parents who took time out to raise children and lower-paid workers \u2014 \u201cthere are also losers, notably some higher-earners who lost the chance to build up a large additional state pension when this element of the system was abolished in 2016.\u201d\u00a0<\/p>\n
Verdict: true for some, not for all<\/p>\n
The myth: Britain\u2019s state pension is the worst in Europe<\/p>\n
Retired people in Britain get less than a quarter of their pre-retirement salary as state pension, while someone in Italy gets 76 per cent, according to the investment firm Fidelity.\u00a0The UK has the worst pension income \u201creplacement rate\u201d among the G7 group of the world\u2019s wealthiest nations. <\/p>\n
Some two million pensioners in Britain live in poverty, while more than a million households rely on the state pension and other benefits as their only source of income. <\/p>\n
But the UK is ranked 12th in the world on the 2025 Mercer CFA Institute global pension index report, which benchmarks 52 retirement income systems across the world.\u00a0<\/p>\n
Selby said: \u201cAny comparison with other countries needs to consider the incentives that exist to save for retirement privately, which account for tens of billions of pounds in government spending, as well as automatic enrolment, which compels employers to contribute at least 3 per cent of qualifying earnings to qualifying employees\u2019 pension pots.\u201d<\/p>\n
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