From April 2025, UK pensioners will receive a welcome 4.1% increase in their State Pension payments, thanks to the government’s Triple Lock policy. This system guarantees annual increases based on the highest of inflation, wage growth, or a minimum of 2.5%. While this rise will benefit millions, a significant income gap remains between those on the old and new State Pension systems — with some older pensioners missing out on over £7,500 a year.
Let’s explore how the State Pension changes in 2025, why some pensioners are better off than others, and what steps older retirees can take to increase their income.
New vs. Old State Pension: What’s the Difference?
The UK State Pension is split into two systems:
| Pension Type | Applies To | Full Weekly Rate (April 2025) | Annual Equivalent |
|---|---|---|---|
| Old State Pension | Retired before 6 April 2016 | £176.45 | £9,180 |
| New State Pension | Retired on or after 6 April 2016 | £230.25 | £11,973 |
The New State Pension, introduced in 2016, offers a simplified structure and ties more closely to National Insurance (NI) contributions. To receive the full amount, you typically need 35 qualifying years of NI contributions.
The Old State Pension system required around 30 qualifying years but relied more heavily on complex top-ups like SERPS (State Earnings-Related Pension Scheme) or S2P (State Second Pension), which many did not fully benefit from.
As a result, pensioners on the old system may receive up to £2,793 less per year in base payments alone. But when factoring in additional benefits and entitlements, the total shortfall can climb as high as £7,561 per year.
Why the Income Gap Exists
The old system was piecemeal and often depended on:
- Inconsistent NI records
- Limited access to SERPS/S2P
- Gender gaps (many women took career breaks, affecting NI contributions)
- Complicated top-up schemes and credits
Meanwhile, the new system streamlined entitlements, making it easier for retirees to receive full payments.
How Pension Credit Can Close the Gap
If you’re on the old State Pension and your income is low, Pension Credit can help bridge the financial divide.
From April 2025, Pension Credit rates will increase as follows:
| Household Type | Weekly Pension Credit | Annual Equivalent |
|---|---|---|
| Single Person | £227.10 | £11,809.20 |
| Couple | £346.60 | £18,827.20 |
This brings a single pensioner’s income within just £163.80 of the full New State Pension. Yet, thousands of eligible pensioners don’t claim Pension Credit, missing out on extra income, free TV licenses (for over-75s), housing benefit, and council tax reductions.
How to Check and Apply
If your weekly income is below £218, you may be eligible.
You can apply for Pension Credit:
- Online at gov.uk
- By phone via the Pension Credit claim line: 0800 99 1234
- By post (download a form online or request one by phone)
Check Your NI Record and Fill Gaps
For those not yet at pension age or who recently retired, it’s essential to:
- Log in to your HMRC account
- Check your National Insurance record
- See if you can buy voluntary contributions (Class 3 NI)
Each additional year could boost your pension by up to £303 a year, making it a worthwhile investment for many.
Other Support for Older Pensioners
You might also be eligible for:
- Winter Fuel Payment
- Cold Weather Payment
- Free NHS dental and eye care
- Housing Benefit
- Council Tax Support
Many of these are tied to income levels, so applying for Pension Credit can also unlock access to further help.
Take Action to Protect Your Retirement Income
The 4.1% State Pension increase in April 2025 is a helpful boost. Still, it doesn’t fully address the widening gap between the old and new State Pension systems.
If you’re receiving the old State Pension, it’s worth checking:
- If you’re missing any NI years
- Whether you qualify for Pension Credit
- What other benefits you might be entitled to
By taking a few proactive steps, you can close the income gap, boost your financial security, and ensure a more comfortable retirement.
FAQs
What is the Triple Lock system?
The Triple Lock ensures the State Pension rises each year by the highest of inflation, average wage growth, or 2.5%.
How much is the State Pension increasing in 2025?
It’s rising by 4.1%. The full New State Pension becomes £230.25/week, and the full old Basic State Pension becomes £176.45/week.
Who is eligible for Pension Credit?
If your weekly income is below £218 (single) or £332 (couple), you may qualify. Other eligibility factors apply.
Can I switch from the old to the new State Pension?
No, you can’t switch systems. Your pension type is based on when you reached retirement age.
How do I buy missing NI years?
Log into your HMRC account, view your NI record, and apply to buy voluntary contributions if needed.
