State Pension Glossary

A

Additional State Pension

An earnings-related pension that topped up the basic State Pension under the old system (before April 2016). It had two forms: SERPS (1978-2002) and State Second Pension (2002-2016). You could contract out of it. If you reached State Pension age before April 2016, you may receive Additional State Pension on top of your basic State Pension.

B

Basic State Pension

The flat-rate pension under the old system (before April 2016). Maximum was £141.85/week in 2024/25. Required 30 qualifying years for the full amount. Replaced by the new State Pension for people reaching State Pension age from 6 April 2016 onwards.

Bereavement Benefits

Payments you may get when your spouse or civil partner dies, based on their NI contributions. The current scheme is Bereavement Support Payment (introduced April 2017) - a lump sum plus 18 months of monthly payments. Older schemes include Bereavement Allowance and Widowed Parent's Allowance.

Break-Even Point

The age at which the total extra pension received from deferring or paying voluntary contributions equals the amount given up or paid. Used to calculate whether deferral or voluntary NI makes financial sense. For example, if you defer for 1 year, break-even is typically 17-18 years after you start claiming.

C

Carer's Allowance

A benefit for people caring for someone at least 35 hours/week. Worth £81.90/week (2025/26). Comes with automatic National Insurance credits, giving you qualifying years toward State Pension even if you're not working.

Carer's Credit

National Insurance credit for people caring for someone at least 20 hours/week, even if not claiming Carer's Allowance. Must apply for this credit - it's not automatic unless you get Carer's Allowance.

Child Benefit

Payment for people responsible for children under 16 (or under 20 in education). Worth £25.60/week for eldest child, £16.95 for additional children (2025/26). The person claiming gets automatic NI credits. Can be transferred to the other parent if beneficial.

Class 1 NI

National Insurance paid by employees from wages. Deducted automatically by employers at 12% on earnings between £12,570 and £50,270, then 2% above that (2025/26 rates). Each year you earn above £6,396 counts as a qualifying year.

Class 2 NI

National Insurance paid by self-employed people. Mandatory if profits exceed £6,725/year (£3.50/week for 2025/26). Voluntary Class 2 available for people living abroad or with low self-employed profits - ending April 2026 for periods abroad.

Class 3 NI

Voluntary National Insurance paid to fill gaps in your record. Costs £17.75/week (£923/year) for 2025/26. Each year filled increases State Pension by around £342/year. Worth it if you need more qualifying years and expect to live past break-even (usually 2-3 years after claiming).

Class 4 NI

National Insurance paid by self-employed people on profits above £12,570. Paid through Self Assessment. Doesn't count toward State Pension - only Class 2 gives qualifying years for the self-employed.

Contracted-Out Pension

Before April 2016, workplace pensions could be "contracted out" of Additional State Pension. You paid lower NI in exchange for giving up some State Pension. If you were contracted out, you'll have a deduction on your new State Pension, but should have a better workplace pension to compensate.

CPI (Consumer Prices Index)

The measure of inflation used for State Pension increases under the Triple Lock. Tracks price changes for goods and services. Calculated monthly by the Office for National Statistics. September CPI is used to determine State Pension increases for the following April.

D

Deferral

Delaying your State Pension claim beyond State Pension age. Increases your pension by 1% for every 9 weeks you defer (approximately 5.8% per year). The increase is permanent and lasts for life. No maximum deferral period, but longer deferrals have higher break-even ages.

DWP (Department for Work and Pensions)

The government department responsible for State Pension, benefits, and pensions policy. Administers State Pension payments through the Pension Service.

E

Earnings Growth

Average wage increase across the UK economy. One of the three elements of the Triple Lock. Measured by Average Weekly Earnings (AWE) in September. If earnings growth is the highest of the three elements, State Pension increases by that percentage.

F

Frozen Pension

State Pension that doesn't increase annually because you live in a country without an uprating agreement. Common in Australia, Canada, South Africa, New Zealand, India, and most countries outside the EU/EEA. Pension stays at the rate when you first claimed or when you moved abroad. Can lose tens of thousands over retirement.

Full State Pension

The maximum State Pension you can get under the new system. Requires 35 qualifying years. Worth £230.25/week (£11,973/year) for 2025/26. If you have between 10-34 years, you get a proportional amount. Less than 10 years = nothing (except Pension Credit if low income).

Future Pension Centre

DWP helpline for people who haven't claimed State Pension yet. Contact them to ask about forecasts, NI records, voluntary contributions, or claiming. Phone: 0800 731 0175 (Monday-Friday, 8am-6pm).

G

Gaps (in NI Record)

Tax years in which you didn't pay enough National Insurance or receive credits to count as a qualifying year. Common causes: low earnings, living abroad, self-employment with low profits, time out of work without claiming benefits. Can often be filled with voluntary contributions if recent enough.

Government Gateway

Online account system for accessing government services including State Pension forecast and NI record. Need a User ID and password. Can create one using your National Insurance number. More secure than previous systems.

Graduated Retirement Benefit

An earnings-related addition to basic State Pension for people who paid graduated NI contributions between 1961-1975. Small amounts (typically £1-10/week). Inherited by surviving spouses. Mostly relevant to people who reached State Pension age before 2016.

H

HMRC (HM Revenue & Customs)

Government department responsible for collecting National Insurance and maintaining your NI record. Contact them for NI record queries, missing credits, or errors. Phone: 0300 200 3500.

Home Responsibilities Protection (HRP)

Protection for your basic State Pension if you were caring for children or sick/disabled people (April 1978 to April 2010). Replaced by NI credits from April 2010. Reduced the number of qualifying years you needed for full basic State Pension. Relevant for people who reached State Pension age before April 2016.

I

International Pension Centre

DWP team handling State Pension for people living abroad. Phone: +44 (0)191 218 7777. Contact them to claim from overseas, report address changes, or ask about uprating. Address: International Pension Centre, Mail Handling Site A, Wolverhampton WV98 1LW.

L

Lower Earnings Limit (LEL)

The earnings threshold above which an employed year counts as a qualifying year. Set at £123/week (£6,396/year) for 2025/26. You don't pay NI on earnings below this, but if you earn above it (even £1 more), the whole year counts. Important for part-time workers.

N

National Insurance (NI)

Tax on earnings that funds State Pension, NHS, and some benefits. Paid by employees (Class 1), self-employed (Class 2 and 4), and voluntarily (Class 3). Each year you pay or receive credits counts toward State Pension. Need 10 years minimum, 35 years for full amount.

National Insurance Number (NINO)

Your unique identifier for NI and tax purposes. Format: Two letters, six numbers, one letter (e.g., AB123456C). Issued automatically before 16th birthday. Needed to claim State Pension. Don't share it except with legitimate government services or employers.

New State Pension

The State Pension system introduced 6 April 2016, replacing the two-tier basic + additional system. Single-tier, simpler system. Full amount £230.25/week for 35 qualifying years. Can't claim on spouse's record. No contracting out. Different deferral rules (5.8% per year, no lump sum).

NI Credits

National Insurance credits that count as qualifying years even though you didn't pay NI. Automatic for some situations (unemployment, illness, Child Benefit). Must apply for others (caring, jury service). Free alternative to voluntary contributions. Check if you qualify before paying Class 3.

O

Old State Pension

The State Pension system before 6 April 2016. Two-tier: basic State Pension (up to £141.85/week for 30 years) plus Additional State Pension (SERPS/S2P, earnings-related). Could claim on spouse's record. Could contract out. More generous deferral (10.4% per year, lump sum option). Applies if you reached State Pension age before 6 April 2016.

P

Pension Age

See State Pension age.

Pension Credit

Means-tested benefit for people over State Pension age with low income. Tops up weekly income to £218.15 for single people, £332.95 for couples (2025/26). Also provides help with housing costs, Council Tax, heating. Apply even if you don't qualify for State Pension (less than 10 years).

Pension Forecast

Your personalized estimate of State Pension entitlement. Shows: current amount based on existing qualifying years, forecast if you keep contributing, State Pension age, gaps in record, whether filling gaps would help. Free to check at gov.uk/check-state-pension. Check at least annually.

Pension Service

Part of DWP that administers State Pension payments, processes claims, and handles queries. Contact them if already claiming State Pension or within 4 months of State Pension age. Phone: 0800 731 0469.

Pension Sharing Order

Court order dividing State Pension on divorce or civil partnership dissolution. Can transfer a percentage of State Pension built up during the marriage/partnership. The shared amount becomes part of the recipient's own State Pension. Doesn't happen automatically - must be part of financial settlement.

Protected Payment

Extra amount added to new State Pension if you built up more than £230.25/week equivalent under the old system. Calculated on transition to new State Pension. Increases with inflation. May be partly inheritable by surviving spouse/partner. Not everyone has a protected payment - depends on old system entitlement.

Q

Qualifying Year

A tax year (6 April to 5 April) in which you paid enough National Insurance or received credits to count toward State Pension. Need 10 qualifying years minimum for any State Pension, 35 for full amount. Each additional year (up to 35) adds approximately £6.58/week (£342/year) to your pension.

S

SERPS (State Earnings-Related Pension Scheme)

The first form of Additional State Pension (1978-2002). Earnings-related top-up to basic State Pension. You could contract out of it through workplace pension. Replaced by State Second Pension (S2P) in 2002. Both became part of the new State Pension calculation from April 2016.

Small Earnings Exception

If you're self-employed with profits below £6,725/year (2025/26), you don't have to pay Class 2 NI. However, this means you don't get a qualifying year. Can voluntarily pay Class 2 (£182/year) to get the qualifying year - worth it as it adds £342/year to State Pension.

Specified Adult Childcare Credit

NI credit for people caring for a child under 12 but not receiving Child Benefit (e.g., grandparents, foster carers, parents where other parent claims Child Benefit). Parent receiving Child Benefit must agree to the transfer. Apply using form CA9176. Can be backdated.

State Pension Age

The age at which you can claim State Pension. Currently 66, gradually increasing to 67 by 2028. Will increase to 68 between 2044-2046. Based on date of birth. Can defer claiming past this age for higher payments. Can't claim early (no exceptions). Check your exact age at gov.uk/state-pension-age.

State Second Pension (S2P)

The second form of Additional State Pension (2002-2016). Replaced SERPS. More generous for low earners and carers. Could contract out of it. Ended when new State Pension introduced in April 2016. S2P entitlement was converted into new State Pension for people reaching pension age from 2016 onwards.

T

Tax Year

UK tax and National Insurance year runs from 6 April to 5 April. Qualifying years are calculated per tax year. State Pension rates change each April. Deadlines for filling gaps are typically 5 April.

Triple Lock

The policy that State Pension increases each April by the highest of: average earnings growth, inflation (CPI), or 2.5%. Introduced in 2011. Protects State Pension value against cost of living. Expensive for government, popular with voters. Current government policy but subject to political changes.

U

Uprating

Annual increase to State Pension to keep pace with living costs. Currently governed by Triple Lock. Applies automatically if you live in the UK, EU/EEA, or countries with uprating agreements. Doesn't apply if you live in countries like Australia, Canada, South Africa (frozen pensions).

V

Voluntary National Insurance

Class 2 or Class 3 NI contributions you can pay to fill gaps in your record. Class 3: £17.75/week (£923/year), for most people. Class 2: £3.50/week (£182/year), for self-employed/abroad (ending April 2026 for abroad). Only worth it if: you need more qualifying years, your forecast confirms it will help, you expect to live beyond break-even.

W

WASPI (Women Against State Pension Inequality)

Campaign group for women affected by State Pension age increases (from 60 to 66 between 2010-2018). Argue changes were communicated poorly, leaving women unable to plan. Legal challenges unsuccessful. Highlight issues around pension age transitions.