New State Pension and Current Pensioners

I firmly believe people who have worked hard all their lives deserve security in their retirement. The triple lock means the basic State pension rises by inflation, earnings, or 2.5 per cent, whichever is highest. This means that in 2018-19 the state pension is more than £1,450 a year higher than in 2010. The triple lock will remain in place for the duration of this Parliament. There are also a number of pensioner benefits, including Winter Fuel Payments, free bus passes, free prescriptions and TV licences.  The new State Pension is not about spending more money; it is about making the system fairer and simpler. The reform puts pension expenditure on a sustainable footing and gives people clarity about what they will receive in retirement. 
 
The new system does not simply mean a higher pension for some by virtue of date of birth. Under the old system there were two types of State Pension: basic and additional. Everyone with 30 years of National Insurance (NI) contributions got the basic State Pension. In addition, most people who paid the full rate of NI also accrued additional State Pension (sometimes called SERPS). Those people, therefore, were already receiving a higher State Pension. 
 
However, many people chose to 'contract out'. This means they paid lower NI to opt out of any additional State Pension, contributing instead towards a workplace pension. Under the new system, contracting out and the system of basic and additional State Pension have been abolished; there is now a simple, flat rate State Pension for everyone who has 35 qualifying years. 
 
The end of contracting out means everyone is now paying the same rate of NI. Eventually that will mean everyone with 35 qualifying years will receive the same State Pension. A deduction will be made from the new State Pension for any years contracted out, to account for those who opted out of additional State Pension. 
 
I hope this reassures you that the new system does not disadvantage current pensioners. The only people who will receive the full new State Pension are those who would have received a higher State Pension anyway, because of their contributions.