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Reasons to be cheerful part 1: #pensions and gin

gin 2126375 640Good news seldom comes in brown envelopes. But I got a welcome missive this week from the Department of Work & Pensions: the result of my state pension forecast I requested a few weeks ago. Apparently, I am due the full state pension of £159.55 a week (I assume this will rise over time) from my 67th birthday. But anyway, good news: at least, goodish news. Apparently I will only get the full £159.55 a week if I make another five years’ NI contributions before I’m 67. If I stopped making NI contributions now, then I’d get £139.35 a week.

I think if I make another five years of NI contributions, then I will have paid NI for 36 years, given that I started work when I was 22. Even if I did stop working (which obviously I can’t afford to do) then because I get Child Benefit I would receive NI credits which would count towards my state pension. And even once I’ve got those five years needed for a full pension, the letter from the DWP tells me I need to keep paying NI to help fund other benefits and the NHS, which is fair enough.

While I am pleased that I will get the full state pension (and I urge you to get a forecast: it is free and you just download a form from here of course it’s not enough for me to live on. So now I need to grasp the nettle and get a forecast from the final salary scheme I contributed to when I was an employee. I have absolutely no idea how much I’ll get from it: I do get sent yearly forecasts but in the past I’ve never had the courage to look at the figures. Shamefully, I don’t even know when I get that pension which is totally pathetic as it will be my main source of income, presumably.

I do have a third pension provision – my Sipp – which I save a tiny amount in each month. I don’t hold out great hopes for that producing a nest egg big enough to keep me in gin, but here’s a tiny bit more pension good news: annuity rates are going up. While pension freedom means you can do what you like with your pension fund when you retire, using an annuity to produce an income remains an option. However, annuity rates have been rubbish for ages and even now a £100,000 pension pot would only give a 65 year old an annual income of £5,200 says Hargreaves Lansdown. Hargreaves adds however that 60% of those taking an annuity could get a better deal due to their poor health or lifestyle choices. Never has there been a better reason to reach for the gin – hell, it’s almost an investment in the future.

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Wednesday, 19 December 2018