What is Graduated Retirement Benefit?

Full answer

Graduated Retirement Benefit is one of the oldest surviving elements of the UK state pension system, dating from an earnings-related scheme that operated well before SERPS, the State Second Pension, or the new State Pension existed. **Origins of the scheme** Between April 1961 and April 1975, employees (though not the self-employed) paid Graduated National Insurance contributions on their earnings above a certain level, in addition to the flat-rate contributions of the time, in return for building up 'graduated pension units' that would later be converted into a small additional pension payable alongside the basic State Pension. **Who can still receive it** Only people who were working and paying the relevant graduated contributions between 1961 and 1975 can have built up an entitlement to Graduated Retirement Benefit -- given the scheme ended exactly half a century ago, this now generally means older pensioners, though it can still form part of the State Pension calculation and payments for those who qualify. **How it interacts with the basic and new State Pension** For people receiving the older basic State Pension (those who reached State Pension age before April 2016), Graduated Retirement Benefit is paid as a separate additional amount on top of their basic pension. For those under the new State Pension system, any Graduated Retirement Benefit entitlement built up before April 2016 was incorporated into the 'old rules' calculation used to determine their starting amount, alongside SERPS/State Second Pension entitlement and any contracted-out deduction, rather than being paid as a wholly separate ongoing amount. **How much it is worth** Graduated Retirement Benefit amounts are typically very small in modern terms -- often just a few pounds a week -- reflecting both the relatively low graduated contributions paid at 1960s and early-1970s earnings levels, and the fact contributions only ran for a maximum of 14 years under the scheme. It is uprated each year in the same way as other State Pension elements, so its cash value has grown over time even though the underlying entitlement was fixed decades ago. **Why you might not realise you have it** Because the scheme ended in 1975 and payments are often a very small part of an overall State Pension amount, many pensioners are unaware Graduated Retirement Benefit forms part of their payment at all, simply seeing it folded into their total weekly State Pension figure without a clear breakdown, unless they specifically ask DWP for a detailed explanation of how their pension is made up. **Worked example** A pensioner who reached State Pension age before April 2016, and who worked full-time throughout the early-to-mid 1970s, has a basic State Pension of £184.90 a week (the 2026/27 rate) plus a small Graduated Retirement Benefit amount of a few pounds a week arising from Graduated National Insurance contributions paid between 1972 and 1975, before the scheme ended -- this Graduated Retirement Benefit element is uprated annually alongside the rest of their pension. **Practical tip** If you reached State Pension age under the old basic State Pension system and worked during the early-to-mid 1970s, ask DWP for a full breakdown of how your State Pension is calculated if you want to understand exactly how much, if any, Graduated Retirement Benefit you are receiving as part of your total payment.

Try the calculator

More answers

• What was contracting out and why might it reduce my State Pension?