Less than half of pensioners to get full new State Pension

Two million people set to retire between 2016 and 2020 will miss out on the full new State Pension, according to information obtained by Hargreaves Lansdown.

Approximately 3.5 million workers will reach their State Pension age between 2016 and 2020, but just 45% (or 1.5 million) will be entitled to receive the full £148.40.

This means over half of pensioners will get less than they might have been led to expect from the Government.

Hargreaves Lansdown says the majority of people falling short of the full State Pension are likely to have been contracted out during their working lives, while others are those with interruptions in National Insurance contributions such as mothers or the self-employed.

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Falling short

Hargreaves Lansdown estimates 30% of pensioners (equivalent to one million people) retiring in the next five years will get less than 90% of the new State Pension, which would mean an income of no more than £133.56 a week.

It warns the threshold could be even worse than that as the projections are based on current numbers.

Based on a State Pension that is likely to be £155 per week by 2016 (assuming a 2% rise each year) the 30% of pensioners not eligible to receive the full amount would actually only receive what equates to 85%.

Pension freedoms

Hargreaves Lansdown warns the new pension freedoms due to come into force in April 2015 could further complicate matters, as this group will be allowed to access their private savings before getting the full picture on their retirement income.

Tom McPhail Head of Pensions Research at Hargreaves Lansdown said: "The new State Pension will ultimately be a simpler and fairer system. However in the short term it will be complicated and many people are likely to get less than they may expect.

"With the new pension freedoms meaning that they will be free to spend all their private pension savings, it is imperative that they receive a proper state pension forecast. Without this, they could get a nasty shock when they do reach State Pension age."

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