State pension incomes continue to climb with women retiring under the new state pension system being the major beneficiaries, the latest government figures show.
The Department for Work and Pensions quarterly benefit statistics show there were 12.6 million people receiving the State Pension in August 2022, an increase of 130,000 on the previous year. A total of 2.9 million people were receiving the new state pension, an increase of 670,000.
The average weekly payment for people receiving a State Pension was £165.58, up £6.47 since August 2021. Women received on average £155.24 per week, compared to £177.78 for men. In contrast, the new state pension weekly payment was £173.71.
The DWP said the introduction of the new state pension has evened out some of the gap between the average weekly payments for men and women, as women tend to get more under the new rules.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “State pension incomes continue to climb with women retiring under the new state pension system being the major beneficiaries. It has allowed women to significantly close the gender gap, although this isn’t all good news because the increase for women has been accompanied by a cut for men.
“The playing field is levelling off though it’s important to add that not everyone gets a full state pension.”
Up to 1.8 million people receive less than £100 per week for their state pension. Currently, people retiring under the new state pension system usually need 35 years’ worth of qualifying National Insurance Credits to claim a full state pension but many people receive less than this due to gaps in their employment record.
However, there is the option to buy credits. A full year costs around £800 and for each year, an individual receives 1/35th of a year’s state pension, around £275. This means that someone can effectively earn their money back in around three years.
For men born after 5 April 1951 and women born after 5 April 1953, there is the option to plug gaps in their National Insurance record dating back to 2006 but from April 6 this opportunity will end and individuals will only be able to buy contributions as far back as six years ago.
Morrissey said those on lower incomes should also make sure they are claiming everything they are entitled to. The DWP said there were 44,000 fewer recipients of Pension Credit in August 2022 compared to the same period a year earlier.
Morrisey added: “It’s clear there are still many people who could be receiving this valuable benefit who aren’t and we await data showing whether the government’s drive to increase take up has been successful or not. In addition to topping up the income of the poorest pensioners, it acts as a valuable gateway to other important benefits – most notably the extra cost of living payments issued by government and so it’s hugely important that everyone who could benefit does so.”
