Thousands of UK state pensioners born before specific dates are being warned of a significant shortfall in their pension income—£2,797 less per year, to be exact.
The Department for Work and Pensions (DWP) has confirmed the payment gap is due to the difference between the basic State Pension and the new State Pension.
This discrepancy is based solely on date of birth, meaning older retirees could miss out on thousands—even if they have similar work and National Insurance records as younger pensioners.
Who Is Affected?
There are two types of state pension schemes in the UK:
- Basic State Pension
- New State Pension
You are placed into one of these based on your date of birth:
| Gender | Born Before | Pension Scheme | Weekly Rate (2025) |
|---|---|---|---|
| Men | 6 April 1951 | Basic State Pension | £176.45 |
| Women | 6 April 1953 | Basic State Pension | £176.45 |
| Men/Women | After those dates | New State Pension | £230.25 |
The £2,797 Income Gap
The DWP has revealed the full annual payment difference between the two pensions:
| Scheme | Weekly Rate | Annual Amount |
|---|---|---|
| Basic State Pension | £176.45 | £9,175.40 |
| New State Pension | £230.25 | £11,973.00 |
| Annual Difference | – | £2,797.60 |
That means older pensioners are losing £53.80 every week, which adds up to £2,797.60 less per year.
Why the Two Systems Exist
The basic State Pension was replaced by the new State Pension on 6 April 2016. This change aimed to simplify pension payments and increase the full amount available, but only applies to:
- Men born on or after 6 April 1951
- Women born on or after 6 April 1953
Unfortunately, those born earlier remain permanently on the lower-value scheme, even if they worked similar careers and paid similar National Insurance contributions.
State Pension Age Changes
Adding to the challenge, the State Pension age is rising:
| Birth Date Range | New State Pension Age |
|---|---|
| Before 1960 | 66 |
| 6 March 1961 – 5 April 1977 | 67 (by 2028) |
| After 1977 | Could rise to 68 |
The government is reviewing plans to bring the increase to 68 forward, due to the financial pressure of funding pensions for a growing elderly population.
Expert Concerns
Many financial experts have expressed concern over this generation divide in pension income.
Older pensioners on the basic scheme:
- May be more vulnerable
- Have fewer options to supplement income
- Often face higher healthcare or support needs
Meanwhile, younger retirees benefit from a higher starting pension under the new system, despite sometimes having shorter contribution histories.
The £2,797 pension gap is a stark reminder of how pension rules based on birth dates can have a significant impact on retirement income.
While the DWP continues to honour both systems, thousands of older pensioners will permanently receive less, despite potentially equal contributions.
If you’re approaching retirement or already receiving the basic State Pension, now is the time to review your finances, explore pension top-ups, and seek financial guidance to make the most of what you’re entitled to.
FAQs
Can older pensioners switch to the new State Pension?
No. The scheme is determined by your date of birth, and those born before the cutoff cannot move to the new system.
Can I top up my basic State Pension?
Yes, through voluntary National Insurance contributions or deferring your pension, but this doesn’t close the full £2,797 gap.
Why is there such a big difference between the two pensions?
The new State Pension was designed to be simpler and more generous, but only applies to those reaching pension age after 2016.