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Pension Advice Bristol

State Pensions

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Pension Advice Bristol

The Basic State Pension

PENSION UPDATE

The state pension will increase by 3.1% in 2022/23, in line with September’s Consumer Prices Index (CPI) inflation figure, after the government suspended the triple lock.

It has been calculated that The Treasury would save about £4.bn as a result.

The basic state pension will increase by £4.25, from £137.60 per week to £141.85 per week. The flat-rate state pension should go up by £5.55, from £179.60 per week to £185.15 per week.

If the earnings element of the triple-lock had been retained, the state pension could have increased by 8.3% next year. This would have increased the basic state pension to £149 per week and the flat-rate state pension to £194.50 per week.

The governments decision to suspend the earnings element of the state pension triple-lock means retirees will miss out on a blockbuster 8.3% increase.

Each percentage point increase in the state pension costs the Exchequer an estimated £900m,
meaning the Treasury is likely to save around £4.5bn as a result of the move.

The decision to ditch the triple-lock is a reminder that the state pension, while valuable as a
retirement income foundation, remains uncertain and subject to the whims of politicians.

Both the amount you receive and the age you receive it has been subject to significant reform over
the last decade.

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Pension Advice Bristol

The Basic State Pension

State Pensions

You can claim the basic State Pension if you’re:

  • a man born before 6 April 1951
  • a woman born before 6 April 1953

If you were born later, you’ll need to claim the new State Pension instead.

To get the basic State Pension you must have paid or been credited with National Insurance contributions.

The most you can currently get is £137.60 per week.

The basic State Pension increases every year by whichever is the highest of the following:

  • earnings – the average percentage growth in wages (in Great Britain)
  • prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
  • 5%

The earliest you can get the basic State Pension is when you reach State Pension age.

To get the full basic State Pension you need a total of 30 qualifying years of National Insurance contributions or credits. This means you were either:

If you have fewer than 30 qualifying years, your basic State Pension will be less than £137.60 per week but you might be able to top up by paying voluntary National Insurance contributions. To get information about your basic State Pension, contact the Pension Service or the International Pension Centre if you live abroad

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Pension Advice Bristol

Not eligible?

State Pensions

If you’re not eligible for a basic State Pension or you are not getting the full amount, you might qualify for a ‘top up’ to £82.45 per week through your spouse’s or civil partner’s National Insurance contributions.

You can get the ‘top up’ if both of you have reached State Pension age and either:

  • your spouse or civil partner reached State Pension age before 6 April 2016 and qualifies for some basic State Pension, even if they have not claimed it
  • your spouse or civil partner reached State Pension age on or after 6 April 2016 and has at least one qualifying year of National Insurance contributions or credits from before 6 April 2016, even if they do not qualify for any new State Pension or they have not claimed it

If your spouse or civil partner was born before 6 April 1950, you can only get the ‘top up’ if you’re a woman who is married to either:

  • a man
  • a woman who legally changed their gender from male to female during your marriage

If you’re not getting the ‘top up’ but think you qualify, contact the Pension Service.

You need to contact the Pension Service to claim your ‘top up’ if you’re a married woman and:

  • your spouse reached State Pension age before 17 March 2008
  • you reached State Pension age before your spouse

You’ll get any Additional State Pension or Graduated Retirement Benefit based on your own contributions in addition to the ‘top up’.

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not covered by any of these groups?

State Pensions

If you’re not covered by any of these groups but want a State Pension you might be able to pay voluntary National Insurance contributions.

Men born before 1945 and women born before 1950 need more qualifying years to get a full State Pension and a certain minimum number of years to get any State Pension at all.

Your first payment is made at the end of the first full week after you reach State Pension age. If you deferred your State Pension, you’ll get your first payment at the end of the first full week in which you want to start getting your pension.

Your first payment will not include the time between reaching State Pension age and your normal payment day if that’s less than one week. The basic State Pension is usually paid every 4 weeks into an account of your choice. You’re paid ‘in arrears’, which means you’re paid for the last 4 weeks, not for the coming 4 weeks.

You will not get your State Pension automatically – you have to claim it.

To claim the basic State Pension you can call the State Pension claim line on 0800 731 7339 or print off and post the State Pension claim form to the Pension Service. Lines are open Monday to Friday 9.30am to 3.30pm.

The postal address to send or request a claim form is:

Pension Service 8
Post Handling Site B
Wolverhampton
WV98 1AF

You can claim your State Pension even if you carry on working.

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increase your basic State Pension

State Pensions

There are ways you can increase your basic State Pension if you:

  • are not eligible for the full amount (£137.60 per week)
  • want to receive more than the full amount

You need 30 years of National Insurance contributions to be eligible for the full basic State Pension. If you have gaps in your insurance record, you may be able to make voluntary contributions to increase your pension.

Deferring your State Pension could increase your payments when you decide to claim. The basic State Pension increases by 1% for every 5 weeks you defer.

The extra amount is paid with your regular State Pension and can be claimed on top of the full basic State Pension amount.

If you’re married or in a civil partnership you may be eligible to increase your basic State Pension to £82.45 per week. Check if you qualify. You might also qualify for the Additional State Pension or, if you’re on a low income, Pension Credit.

 

There are circumstances when an individuals’ State Pension can be inherited by a surviving spouse or civil partner they should contact the Pension Service when you die to check what they can claim they can also check what inheritance they might be entitled to.

 

You must tell the Pension Service if anything in your circumstances changes, for example if you:

  • move home
  • move abroad or return to the UK
  • go into a care home
  • change your bank account
  • marry or form a civil partnership
  • get divorced or have your civil partnership dissolved
  • are widowed or your civil partner dies
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Pension Advice Bristol

The New State Pension

State Pensions

You’ll be able to claim the new State Pension if you are:

  • a man born on or after 6 April 1951
  • a woman born on or after 6 April 1953

 

The earliest you can get the new State Pension is when you reach State Pension age.

If you reached State Pension age before 6 April 2016, you’ll get the State Pension under the old rules instead.

 

You’ll usually need at least 10 qualifying years on your National Insurance record to get any State Pension. They do not have to be 10 qualifying years in a row.

This means for 10 years at least one or more of the following applied to you:

 

If you’ve lived or worked abroad you might still be able to get some new State Pension.

You might also qualify if you’ve paid married women’s or widow’s reduced rate contributions.

 

You do not have to stop working when you reach State Pension age but you’ll no longer have to pay National Insurance. You can also request flexible working arrangements.

 

The full new State Pension is £179.60 per week. The actual amount you get depends on your National Insurance record. The only reasons the amount can be higher are if:

 

You can get a State Pension forecast to find out how much you could get and when.

You can still get a State Pension if you have other income like a personal pension or a workplace pension. You might have to pay tax on your State Pension.

 

If you’ve reached State Pension age and you’re on a low income, you may also qualify for Pension Credit, even if you’ve saved money for retirement.

After you’ve made a claim you’ll get a letter about your payments.

The new State Pension is usually paid every 4 weeks into an account of your choice. You’re paid in arrears (for the last 4 weeks, not the coming 4 weeks).Your first payment

Your first payment will be within 5 weeks of reaching State Pension age. You’ll get a full payment every 4 weeks after that.

You might get part of a payment before your first full payment. The letter will tell you what to expect.

You will not get your new State Pension automatically – you have to claim it. You should get a letter no later than 2 months before you reach State Pension age, telling you what to do.

If you have not received an invitation letter, but you are within 4 months of reaching your State Pension age you can still make a claim.

The quickest way to get your State Pension is to apply online through the Government website you can also:

The postal address to send the completed form to is:

Pension Service 8
Post Handling Site B
Wolverhampton
WV98 1AF

You can claim your new State Pension even if you carry on working. However, you have the option to defer which can increase the amount you get.

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full new State Pension

State Pensions

The full new State Pension is £179.60 per week. What you’ll receive is based on your National Insurance record.

Your National Insurance record before 6 April 2016 is used to calculate your ‘starting amount’. This is part of your new State Pension.

Your starting amount will be the higher of either:

  • the amount you would get under the old State Pension rules (which includes basic State Pensionand Additional State Pension)
  • the amount you would get if the new State Pension had been in place at the start of your working life

Your starting amount will include a deduction if you were contracted out of the Additional State Pension. You may have been contracted out because you were in a certain type of workplace, personal or stakeholder pension.

You can get more State Pension by adding more qualifying years to your National Insurance record after 5 April 2016. You can do this until you reach the full new State Pension amount or reach State Pension age – whichever is first.

Each qualifying year on your National Insurance record after 5 April 2016 will add about £5.13 a week to your new State Pension. The exact amount you get is calculated by dividing £179.60 by 35 and then multiplying by the number of qualifying years after 5 April 2016.

You’ll usually need at least 10 qualifying years on your National Insurance record to get any State Pension.

You’ll need 35 qualifying years to get the full new State Pension.

You’ll get a proportion of the new State Pension if you have between 10 and 35 qualifying years.

The new State Pension increases each year by whichever is the highest:

  • earnings – the average percentage growth in wages (in Great Britain)
  • prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
  • 5%
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State Pension forecast

State Pensions

You can get a State Pension forecast to find out how much new State Pension you may get.

If you would like further information on the new State Pension you can read ‘Your new State Pension explained’ for more detailed information about the State Pension scheme.

Your starting amount may include a deduction if you were in certain:

  • earnings-related pension schemes at work (such as a final salary or career average pension) before 6 April 2016
  • workplace, personal or stakeholder pensions before 6 April 2012

You may have paid lower National Insurance contributions and paid into one of these pensions instead. This is known as being ‘contracted out’ of the Additional State Pension and will affect most people who have been in work.

You can check with your pension provider if you’ve been contracted out in the past. 

On 6 April 2016 these rules changed so that if you were contracted out:

  • you’ll no longer be contracted out
  • you’ll pay more National Insurance(the standard amount)

Check your old payslips. You were contracted out if the National Insurance contributions line has the letter D or N next to it. You were not contracted out if it has a letter A.

If there’s a different letter, check with your employer or pension provider.

You’re more likely to have been contracted out if you worked in the public sector, for example:

  • the NHS
  • local councils
  • fire services
  • the civil service
  • teaching
  • police forces
  • the armed forces

You paid National Insurance at a lower rate if you were contracted out.

Your new State Pension is based on your National Insurance record when you reach State Pension age. You’ll usually need to have 10 qualifying years on your National Insurance record to get any new State Pension. You may get less than the new full State Pension if you were contracted out before 6 April 2016. You may get more than the new full State Pension if you would have had over a certain amount of Additional State Pension under the old rules.

You will need 35 qualifying years to get the new full State Pension if you do not have a National Insurance record before 6 April 2016.

When you are working you pay National Insurance and get a qualifying year if:

  • you are employed and earning over £184 a week from one employer
  • you are self-employedand paying National Insurance contributions

You might not pay National Insurance contributions because you’re earning less than £184 a week. You may still get a qualifying year if you earn between £120 and £184 a week from one employer. You may get National Insurance credits if you cannot work – for example because of illness or disability, or if you’re a carer or you’re unemployed.

For example, you can get National Insurance credits if you:

  • claim Child Benefitfor a child under 12 (or under 16 before 2010)
  • get Jobseeker’s Allowance or Employment and Support Allowance
  • get Carer’s Allowance

You might be able to pay voluntary National Insurance contributions if you’re not in one of these groups but want to increase your State Pension amount.

You can have gaps in your National Insurance record and still get the full new State Pension.

You can get a State Pension forecast which will tell you how much State Pension you may get. You can then apply for a National Insurance statement from HM Revenue and Customs (HMRC) to check if your record has gaps.

If you have gaps in your National Insurance record that would prevent you from getting the full new State Pension, you may be able to:

You might be able to inherit an extra payment on top of your new State Pension if you’re widowed. You will not be able to inherit anything if you remarry or form a new civil partnership before you reach State Pension age.

The new State Pension is based on your own National Insurance record. If you paid married women’s or widows’ reduced rate National Insurance, you might be able to increase your new State Pension if you’re eligible.

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important things you should know

FREQUENTLY ASKED QUESTIONS

Most pension investments allow up to 25% to be taken as a Tax Free Lump Sum. Anything drawn over this amount will be subject to income tax at your highest marginal rate. Tax will usually be paid under an emergency tax code with any overpaid tax repaid in the following tax year or earlier if you put a claim into HMRC.

Click here to calculate the amount that will initially be deducted.

Also known as a ‘Money Purchase’ pension this is a pension where the benefits are not defined and the value of the pension investment will depend entirely on how much money has been paid in and what return on the investment has been achieved.

Often referred to as a ‘Final Salary’ pension which is where the benefits that the pension will provide at retirement are defined and not dependent on how much money has been paid in. These types of pensions do not have a published investment value though it is usually possible to obtain what is known as a Cash Equivalent Transfer Value (CETV) where the scheme administrators will calculate how much they are prepared to let you have if you forgo the defined benefits built up whilst you were a scheme member.

Tax will most likely have been deducted under PAYE rules using an emergency tax code. You can either wait until HMRC reconcile your tax affairs in the next tax year or claim for early repayment of any overpaid tax by using form P53 or P53Z. These forms are available from www.gov.uk. 

You cannot normally access the money in your pension before age 55.

Our business model involves us asking you a series of questions designed to enable us to gather sufficient information and understanding of your requirements that we can present you with information on all of the options available to you. We aim to do this in such a way that you are fully empowered and confident enough to make an informed decision as to the best outcome for your personal circumstances. If at any time during the process it becomes evident that you require and/or need formal recommendations for a particular course of action and we will refer you to an independent financial adviser.

Enhanced Annuities

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Enhanced annuities work in the same way as a standard pension annuity but also consider your lifestyle and health conditions. If you qualify for an enhanced annuity you would expect it to provide more income for the rest of your life than a standard pension annuity would provide.

Lifetime Annuities

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A lifetime pension annuity is designed to provide you with an income and is payable for the rest of your life as a minimum. The funds that you have saved into your pension pot are used to purchase an annuity either from your existing pension company or from a new pension income provider.

Fixed Term Annuities

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A Fixed Term Annuity is a type of Guaranteed Drawdown product designed to allow you to access your pension in a more flexible manner than purchasing a set income for the remainder of your life which is what a lifetime pension annuity does. They provide a guaranteed return on your investment.

Flexi Access Drawdown

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Flexible Access Drawdown products provide a flexible way to take your pension and range from relatively low risk products with guaranteed returns to high-risk products investing in all manner of asset classes. Whilst providing flexibility they do not give a guaranteed income for the whole of life. 

Releasing Tax Free Cash

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When you are 55 or over you can access your pension and, if you wish, take a tax-free lump sum. You can then invest the remainder in a pension product and either take an income or keep it invested. You can normally take up to 25% of your investment tax free and use this money as you wish.

Tax Free Lump Sum

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If your pension has not been crystalised (accessed previously) you can take a tax-free lump sum from the pension investment. This is normally in the form of a 25% tax free lump sum payment, but some types of pension schemes do have enhanced benefits and permit more than 25% to be taken.

State Pensions

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The Basic State Pension is available to men born before 6th April 1951 and women born before 6th April 1953 and the New State Pension available to those born later. We have links to the Government information pages and the State Pension Age Calculator and a link to obtain your State Pension Forecast.

Equity Release

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Is a way of taking some of the equity (investment wealth) built up in your property as tax-free cash to provide additional income in retirement or to pass over inheritance money to the family before dying, repay other mortgages or borrowing or to just spend on something you have always wanted.  

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What areas do we cover?

With our office in Ilminster we can provide face to face meetings for people in Taunton and Yeovil. We are may also be able to arrange face to face meetings in the areas of Barnstaple, Bridgwater, Glastonbury, Shepton Mallet and Wells areas. 

We also provide our reliable pensions services to clients in Dorset, Somerset, Gloucester, Wiltshire, Bristol, Cornwall, Dorset and Somerset.       

We are happy to have video meetings with people and therefore can provide a visual meeting to anyone in the UK. We are happy to talk through your options over the phone regardless of your location, so we can discuss your needs. We also are very happy to communicate with you through email which many customers now prefer, we can therefore provide a full UK coverage.