New State Pension vs Basic State Pension: What Expats Need to Know

In April 2016, the UK government replaced the old two-tier state pension — the basic state pension plus additional state pension (SERPS or State Second Pension) — with a single, flat-rate new state pension. For British expats, understanding which system applies to them, and how the two differ in practice, is essential. The transition was not clean: millions of people straddle the old and new systems, and the rules around NI credits, contracting out, and entitlement calculation differ considerably between the two.

Which System Applies to You?

The dividing line is your state pension age date relative to 6 April 2016:

• You reached state pension age before 6 April 2016 — you are on the old system: basic state pension plus any additional state pension (SERPS/S2P) you built up.
• You reached state pension age on or after 6 April 2016 — you are on the new state pension system.

This is regardless of when you actually claimed your pension, and regardless of when you left the UK. An expat who turned 65 in 2014 and did not claim until 2020 is still on the old system. A 45-year-old who emigrated to Spain in 2010 will, when they eventually reach pension age, receive the new state pension.

The Old Basic State Pension — Rates and Structure

Under the old system (as of the 2026/27 tax year), the full basic state pension is £169.50 per week. This figure is updated annually by the triple lock (highest of CPI inflation, wage growth, or 2.5%).

To receive the full basic state pension, you need 30 qualifying years of NI contributions or credits. For expats, this is often achievable through a combination of working years in the UK, voluntary contributions paid while abroad, and credits received during periods of unemployment or caregiving before emigration.

In addition to the basic state pension, many people under the old system also receive additional state pension: SERPS (State Earnings-Related Pension Scheme, applicable to earnings from 1978 to 2002) or S2P (State Second Pension, from 2002 to 2016). The amount depends on earnings and whether you were contracted out — see below.

There is also a small category of graduated retirement benefit for those who contributed between 1961 and 1975.

The New State Pension — Rates and Structure

The full new state pension in 2026/27 is £221.20 per week. This too is protected by the triple lock.

To receive the full amount, you need 35 qualifying years. With fewer years, you receive a proportionately reduced amount. The minimum to receive any new state pension at all is 10 qualifying years.

There is no separate additional state pension under the new system — it is a single flat-rate payment. However, your starting amount under the new system may be higher or lower than the flat rate, depending on a complex transitional calculation.

The Transitional Calculation — Where It Gets Complicated

People who reached pension age after April 2016 but had already accrued NI contributions before that date go through a transitional calculation. The DWP calculates two figures:

1. What you would have received under the old system (basic plus additional pension) based on your record to April 2016.
2. What you would receive under the new system based purely on your post-2016 record.

The higher of the two becomes your starting amount. If the starting amount is already above the full new state pension, it is protected (as a "protected payment") but you cannot increase it further. If it is below, you continue building towards the full rate through additional qualifying years.

For expats who had substantial SERPS accrual — particularly those in higher-earning professional roles before they left the UK — the old-system calculation can sometimes produce a higher starting amount than the new system flat rate would. This makes the transitional calculation particularly important for this group.

Contracting Out — A Key Difference for the Two Systems

Under the old system, employees and self-employed individuals could contract out of SERPS/S2P. If you contracted out — which was common in public sector employment, through personal pensions, or through employer defined benefit schemes — you paid lower NI contributions, but built up less additional state pension.

Under the new state pension, contracting out history is factored in through the transitional calculation. If you were contracted out for significant periods, your starting amount may be meaningfully lower than the full new state pension. This catches many expats by surprise — they expect a full pension and receive less.

For expats who were long-term public sector workers (NHS, civil service, teaching, police), contracting out is almost universal and the impact on the starting amount can be significant.

Qualifying Years — How They Differ Between Systems

The threshold differs:

• Old system: 30 qualifying years for a full basic state pension.
• New system: 35 qualifying years for a full new state pension.

For expats who have fewer UK qualifying years, the proportionate reduction differs too:

• Under the old system, each missing year (below 30) reduces the pension by 1/30th.
• Under the new system, each missing year (below 35) reduces the pension by 1/35th.

Because the new state pension has a higher full rate (£221.20 vs £169.50), each qualifying year under the new system is worth more in absolute terms (roughly £6.32/week per year vs £5.65/week per year). Voluntary NI contributions are therefore typically slightly more cost-effective per year for those under the new system.

What Counts as a Qualifying Year for Each System?

The definition of a qualifying year is the same for both systems: a tax year in which you either:

• Paid Class 1 or Class 2 NI contributions (whether through employment or self-employment), or
• Received NI credits (for unemployment, caregiving, ill health, etc.), or
• Made voluntary Class 3 NI contributions.

Expats can build qualifying years through:

• Class 2 voluntary contributions — available to expats who are employed or self-employed abroad and were ordinarily resident in the UK before emigrating. Cost in 2026/27: approximately £3.45/week.
• Class 3 voluntary contributions — available more broadly but at a higher cost: approximately £17.45/week in 2026/27.

Class 2 contributions, where eligible, represent exceptional value — a full year's Class 2 costs around £180 and can add approximately £6.32/week to a new state pension for life. The break-even point is under three years of payments.

How the Frozen Pension Rules Interact

Regardless of whether you are on the old or new system, the frozen pension rules apply based on your country of residence. If you live in a country without a bilateral social security agreement that includes uprating provisions, your pension is frozen at the rate when you first claimed.

Critically, this means:

• An expat on the old system in a frozen country receives a fixed basic rate (often £169.50 or less, depending on when they claimed).
• An expat on the new system in a frozen country is frozen at whatever the new state pension was when they claimed.
• An expat who lives in an uprated country benefits from triple lock increases on whichever system they are on.

The new state pension's higher full rate means the cumulative cost of the frozen pension is greater in absolute terms for new-system claimants in frozen countries — the forgone uprating each year is applied to a higher base.

Impact on Survivor Benefits

Under the old system, a surviving spouse or civil partner could sometimes inherit additional state pension from their deceased partner. The rules were complex but could add meaningful income to a surviving spouse's pension.

Under the new system, the ability to inherit additional state pension is substantially reduced. Some people who married before April 2016 may still have inherited additional state pension rights under transitional rules, but for the vast majority of new state pension recipients, what they receive is what they built up themselves — there is no inherited SERPS-style component.

For expats, this matters when planning joint income in retirement: the old system had an inheritable element; the new system largely does not.

Deferral — Same Rules, Different Increments

Both systems allow you to defer claiming your state pension beyond your state pension age, and both provide an increment for doing so. However, the rates differ:

• Old system deferral: adds approximately 1% for every five weeks deferred (roughly 10.4% per year).
• New system deferral: adds approximately 1% for every nine weeks deferred (roughly 5.8% per year).

The deferral increment under the new system is less generous than under the old system. For expats deciding whether to defer, this difference — combined with exchange rate considerations and the frozen pension question — needs careful analysis.

Checking Which System Applies and What You Will Receive

The DWP's online Check Your State Pension service (via the Government Gateway) will show you:

• Whether you are on the new or old system
• Your current qualifying years and projected pension amount
• Your starting amount if you are in the transitional calculation
• Any contracted-out deduction

This tool is available to people within roughly four years of their state pension age. Those further out can request a written State Pension Statement via post.

Always check your actual record rather than estimating — the differences between the two systems, combined with contracting-out adjustments and transitional calculations, make accurate estimation without the official data unreliable.

How Global Investments Can Help

Understanding which state pension system applies to you, what you have built up, and how to fill any gaps efficiently is the starting point for retirement income planning for any British expat. Global Investments works with clients across major property markets worldwide to integrate state pension entitlement into a complete retirement income strategy — alongside workplace pensions, SIPPs, and, where appropriate, QROPS or overseas pension arrangements.

Our advisers can review your state pension position, model the impact of voluntary NI contributions, and help you plan drawdown or annuity decisions with full visibility of your expected state pension income. Contact us for a no-obligation conversation.

Please note: State pension rates and rules are reviewed annually. Figures in this guide are based on HMRC and DWP rules as of 2026/27. Rules may change. Seek regulated financial advice before making decisions about voluntary contributions or pension planning.