The UK State Pension system is not the same for everyone.

Depending on your date of birth and when you reached retirement age, you could be receiving significantly less than others.

In fact, research shows that some pensioners are losing out on almost £2,800 each year, despite paying into the system for decades.

Understanding how the basic State Pension and the new State Pension work is essential to know if you are one of those affected.

Two Separate State Pension Schemes

The Government divides the State Pension into two different schemes:

1. Basic State Pension – for people who reached retirement age before the new system was introduced.
2. New State Pension – for those who reached retirement age on or after the change.

Both schemes are funded by the Department for Work and Pensions (DWP), but they pay out at different rates, meaning that your date of birth has a direct impact on how much money you receive every week.

Basic State Pension: Who Qualifies?

The basic State Pension applies to:

• Men born before 6 April 1951
• Women born before 6 April 1953

For these individuals, the maximum weekly payment is £176.45 if they have enough qualifying National Insurance contributions.

Annual Income on Basic Pension

This adds up to £9,175.40 per year for those who qualify for the full amount.

While this was considered a fair sum in earlier years, today it falls short compared to what newer pensioners are entitled to.

New State Pension: Who Gets It?

The new State Pension applies to:

• Men born on or after 6 April 1951
• Women born on or after 6 April 1953

The maximum weekly amount under this scheme is £230.25, which is £53.80 more per week than the basic State Pension.

Annual Income on New Pension

This totals to £11,973 per year, which is significantly higher than the maximum basic pension.

The Pension Gap: Older Generations Lose Out

The difference between the two schemes is substantial.

Pensioners on the basic State Pension receive up to £2,797.60 less per year than those on the new State Pension, even if both groups have the required qualifying years of National Insurance contributions.

This gap highlights how older pensioners, despite working and contributing for decades, are receiving lower payments simply because of when they were born.

How Many People Are Affected?

According to the House of Commons Library, in the 2024–25 tax year:

• Around 8.57 million pensioners were receiving the basic State Pension
• Around 4.38 million pensioners were receiving the new State Pension

This means the majority of UK pensioners are stuck on the older scheme, missing out on nearly £2,800 every year compared to those on the newer scheme.

National Insurance Contributions: The Key Requirement

Your eligibility for the full State Pension depends heavily on how many qualifying years of National Insurance contributions you have made.

• Men born between 1945 and 1951 usually require 30 years of qualifying contributions for the full basic State Pension.
• Men born before 1945 need up to 44 years of contributions.
• For the new State Pension, most people need 35 qualifying years to receive the full amount.

This means that not only do older pensioners receive less money, but they also often had to contribute more years to qualify in the first place.

Why the Two-Tier System Exists

The split in the pension system was created to modernize retirement benefits and make them easier to understand.

The new State Pension was designed to provide a simpler, fairer system for future retirees.

However, this left millions of older pensioners on the basic scheme, which has a lower payout.

While the Government introduced benefits like Pension Credit to support those with low incomes, many retirees still feel the system is unfair.

Real-Life Impact on Pensioners

For many pensioners, this gap makes a serious difference in daily life:

• Those on the basic State Pension may struggle more with the cost of living crisis, as inflation and rising bills reduce the value of their income.
• Pensioners on the new scheme enjoy a larger cushion against increasing expenses, allowing them more financial flexibility.

Calls for Reform

Campaigners and pensioner advocacy groups have repeatedly urged the Government to review the two-tier system.

They argue that the generation gap creates inequality and that all pensioners should receive at least the same base rate of pension.

While reforms are often debated, no major changes have yet been announced to close the £2,800 annual gap between older and younger pensioners.

The UK’s State Pension system highlights a clear divide between older and newer retirees.

Those born before April 1951 (men) and April 1953 (women) remain on the basic State Pension, capped at £176.45 per week, while later generations benefit from the new State Pension at £230.25 per week.

Over a year, this creates a significant income gap of £2,797.60, affecting millions of pensioners nationwide.

Although the new system aims to be simpler and fairer, the reality is that older pensioners—many of whom contributed for longer—receive less money.

Until changes are introduced, around 8.57 million retirees will continue to feel left behind compared to the 4.38 million enjoying higher payments under the new scheme.

Frequently Asked Questions