Just 45 percent of those retiring between 2016 and 2020 are set to receive full state pension amount. One million pensioners in first 5 years are set to receive less than 86 percent of new state pension.

Around 2 million retiring pensioners will miss out on getting the full new state pension, a freedom of information request submitted by Hargreaves Lansdown has revealed. Worryingly, under the new pension freedoms, they might already have spent any private pension savings they have accumulated before they find out just how much they can expect from their state pension. Tom McPhail, Head of Pensions Research, Hargreaves Lansdown: ‘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’

Approximately 3.5 million workers will reach their state pension age between 2016 and 2020. Of these, just 45 percent will be entitled to receive a full new state pension of at least £148.40. This means nearly 2 million pensioners will get less than they might have been led to expect by the government. With the new pension freedoms due to start in April 2015, all these people will potentially be able to access their private savings before their state pension age.

30 percent of pensioners will get less than 90 percent of the new state pension, meaning that they will be entitled to a state pension income of no more than £133.56 a week

State pension entitlement for those retiring between 2016 and 2020:

In fact the position is slightly worse than stated. This is because the projections provided by the DWP are based on the current Pension Credit minimum income of £148.40, whereas the state pension in 2016 is likely to be around £155 per week (based on the assumption of two years’ worth of increases at 2 percent a year). 

 This means the 90 percent threshold is actually only going to be around 85 percent of the new state pension; so 30 percent of pensioners – 1 million people –  will be getting less than 85 percent of the new state pension.

 Why will they get less than 100 percent?

The majority of people falling short of the full state pension are likely to have been contracted out during their working lives; others who get less than 100 percent are likely to be those with interrupted National Insurance contribution histories such as mothers and the self-employed.  The formula for calculating the new state pension entitlement is complicated. For those who have been contracted out of the second tier state pension it involves making a deduction from their state pension entitlement to reflect the fact that they have been able to build up a larger private pension using the National Insurance rebate.

Longer term projections of state pension entitlements:

perentages rounded to the nearest 1%