In the UK, older pensioners on the basic State Pension now receive up to £2,797 less each year compared to retirees on the newer system.
This stark disparity arises from the split between two pension schemes: basic and new State Pension. The impact is significant—millions of pensioners are still grappling with lower income despite similar eligibility requirements.
Breakdown: Basic vs New State Pension
| State Pension Scheme | Weekly Rate (2025/26) | Annual Total | Annual Shortfall vs New Pension |
|---|---|---|---|
| Basic State Pension | £176.45 | £9,175 | – |
| New State Pension | £230.25 | £11,973 | +£2,797 |
| Annual Shortfall | — | — | £2,797 |
Older retirees—those born before 6 April 1951 (men) or before 6 April 1953 (women)—receive the lower Basic State Pension, currently £176.45/week, totalling around £9,175/year. Younger retirees fall under the New State Pension, which pays £230.25/week or approximately £11,973/year, a gap of £2,797 annually.
Who’s Most Affected & Why
- Around 8.5 million pensioners are on the basic State Pension, compared to about 4.4 million on the new scheme.
- Despite both schemes receiving the Triple Lock increase—4.1% in April 2025—the underlying gap remains. That translates to a rise of £360/year for basic pensions versus £470/year for new pensions.
Why the Disparity Persists
- The basic pension was phased out in 2016. Older retirees remain under legacy rules tied to 30 years of National Insurance (NI) to qualify, while the new system offers better long-term benefits.
- The new pension, based on 35 qualifying NI years, pays more as a unified sum and benefits from modernized uprating mechanisms.
- Even though both pensions are uprated, the baseline difference—created by the scheme design—persists with each increase.
Real Impacts on Pensioner Lives
- This income shortfall of nearly £2,800 annually can affect living standards, limiting savings, care options, or discretionary spending.
- Many older residents—particularly women with historical career breaks—are disproportionately impacted.
How to Address the Gap
- While it’s not possible to shift older pensioners to the new scheme, retirees can explore:
- Filling gaps in NI contributions to boost their basic pension.
- Deferring pension for higher weekly payouts.
- Claiming Pension Credit, Housing Benefit, or Council Tax Relief to top-up income.
- Seeking guidance—like from Pension Wise or Citizens Advice—for personalized financial planning.
The £2,797 annual pension gap between basic and new State Pension recipients highlights a growing income inequality among UK retirees.
While policy changes reflect inflation and wage growth, they do not close the foundational disparity. Older pensioners—many relying solely on the basic pension—should consider actionable steps like top-ups, deferral, or benefit maximization to ease financial pressure.
FAQs
Because of the split between the basic and new State Pension schemes—older pensioners on the basic plan get £176.45/week, while newer retirees get £230.25/week.
No. Eligibility is set by birth dates. However, older pensioners can still improve their pension through NI contributions, deferral strategies, or additional benefits.