Thousands of state pensioners in the UK, born before certain key dates, are being alerted to a significant gap in their retirement income—amounting to £2,797 less per year.
The Department for Work and Pensions (DWP) has confirmed that the shortfall arises from the difference between the basic State Pension and the new State Pension.
This disparity is determined purely by date of birth, meaning many older retirees are missing out on thousands of pounds annually, even if they have work histories and National Insurance contributions similar to younger pensioners.
Who Is Impacted?
The UK operates two separate state pension systems:
- Basic State Pension
- New State Pension
Eligibility for either scheme is determined by when you were born:
| 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 these dates | New State Pension | £230.25 |
Breaking Down the £2,797 Pension Gap
According to the DWP, the annual difference between the two pensions is as follows:
| 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 |
This means those on the basic pension receive £53.80 less each week, adding up to £2,797.60 less per year.
Why Two Different Pension Systems Exist
The new State Pension was introduced on 6 April 2016 to simplify payments and increase the maximum amount available. However, it only applies to:
- Men born on or after 6 April 1951
- Women born on or after 6 April 1953
Those born before these dates remain permanently on the lower basic pension, regardless of having similar careers or National Insurance records as younger pensioners.
Rising State Pension Age
The State Pension age is also gradually increasing:
| 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 considering bringing the rise to 68 forward, citing financial pressures from an ageing population.
Expert Concerns Over Income Inequality
Financial experts have raised concerns that this generational divide leaves older pensioners on the basic scheme at a disadvantage. Many:
- Have fewer ways to boost their income
- Are more vulnerable financially
- Face higher medical and support costs
Meanwhile, those on the new State Pension often start with a higher income, even if they have shorter contribution histories.
Key Takeaway
The £2,797 annual gap highlights how pension rules linked to birth dates can have a major effect on retirement income.
While the DWP continues to maintain both systems, many older pensioners will permanently receive less, despite potentially equal contributions. If you are on the basic pension or nearing retirement, it’s important to review your finances, check for possible pension top-ups, and seek professional guidance to make the most of your entitlements.
Can older pensioners move to the new State Pension?
No. Your pension scheme is fixed based on your date of birth, and those born before the cutoff cannot transfer to the new system.
Is it possible to increase the basic State Pension?
Yes, by making voluntary National Insurance contributions or deferring your pension. However, this won’t eliminate the full £2,797 gap.
Why is the difference so large?
The new State Pension was designed to be simpler and more generous, but only applies to those reaching pension age after April 2016.