What can you expect from the government in old age?
1. So long as they’ve paid National Insurance (NI) or got NI credits for at least ten years, most people hitting state pension age are entitled to some kind of UK state pension. Be warned, the pension income is taxable!
2. For those born before 6 December 1953, state pension age for men is 65 while for women it is between 60 and 65, depending on their actual birth date. For everyone else, the state pension age will increase to 66 by October 2020 and 67 between April 2026 and March 2028.
3. Those reaching state pension age on or after 6 April 2016 (ie everyone from now on) will get the 'new' state pension. You need to have 35 'qualifying' years or credits to get the full pension of (from 6 April 2018) £164.35 per week. It rises with inflation but bear in mind that’s £8,546.20 a year and you may get less – it’s worked out on a sliding scale of how much NI you paid. If you can’t live on that amount, it might be time to consider other savings plans.
4. Under the old system, there were two savings pots for the pension: the basic and the additional. Some people chose to pay less or no NI into the additional pot, putting it into a private savings plan instead. Because of this, some people reaching state pension age now may get more money and some people will get less from the new state pension, despite their number of qualifying years. This two-pot system finished on 6 April 2016 but savings made before are protected.
5. You can get a state pension forecast from the government by going to https://www.gov.uk/check-state-pension. Check for gaps in your record or benefits you should've earned (see point 6 below).
6. You can get NI credits if you are a carer, a parent or if you’re getting certain sickness or unemployment benefits. Some of these are given automatically, some must be claimed. Find out what you’re owed at https://www.gov.uk/national-insurance-credits/eligibility.
7. Most people can top up their state pension by paying voluntary NI contributions to fill any missing years. Normally you can go back only six years, however.
8. The pension is not paid automatically, you have to claim it. You should get a letter with instructions four months before you reach state pension age. You don’t have to take the pension straight away. The government will increase your pension by just under 5.8% for every full year you delay, provided you’re not getting other sickness or unemployment benefits.
9. If you’re a married woman or a widow, you may have signed up before April 1977 to pay reduced NI contributions and your pension could be docked accordingly. However, you may be able to make a claim on your spouse’s or civil partner’s pension, even if you are divorced, but not if you remarry.
10. If you’re on a low income, you can claim Pension Credit. It has two parts: guarantee credit and savings credit. Guarantee Credit tops up your weekly income to a guaranteed level while savings credit pays out a smaller sum depending on other savings you may have. Those taking the new state pension can't get savings credit.
- The government has a calculator for checking your state pension age at https://www.gov.uk/state-pension-age.
- The Pensions Advisory Service offers free and impartial advice on the phone at 0300 123 1047 or online at http://www.pensionsadvisoryservice.org.uk.
- Check out a longer guide to state pensions at http://www.ageuk.org.uk/money-matters/pensions/state-pension/what-is-the-state-pension.
Last updated 22 August 2017.