State pension warning: Starting amounts could be reduced by private pension arrangements

State pensions are based on National Insurance contributions, with a minimum of 10 years needed to receive any amount in retirement. Under the “new” state pension rules, 35 years of contributions will be needed to receive the full amount.

A person may have contracted out of the Additional State Pension if they were in a certain type of workplace, personal or stakeholder pension.

Specifically, the Government states that the starting amount may include a deduction if the claimant was in:

• Earning-related pension schemes at work (such as a final salary or career average pension) before April 6 2016
• Workplace, personal or stakeholder pensions before April 6 2012

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The reason a person may have contracted out of the Additional State Pension in these circumstances is because National Insurance contributions could have been reduced to pay into these types of private pensions instead.

It may be difficult to remember or keep track of these pension arrangements, especially if the person involved has worked for many employers in their working lives.

However, the government provides a Pension Tracing Service which can help people find their private pension providers contact details.