New research from Standard Life suggests that one in seven (14%) retirees received less money from their State Pension than they were expecting, indicating a possible need for more accessible information on how the contributory benefit is calculated - in advance of reaching retirement age.
Standard Life’s Retirement Voice study highlights knowledge and information gaps around the State Pension and found that a fifth (20%) of retirees admitted they were not aware of how much they would receive from the State Pension before they retired, while one in 10 (9%) did not find it easy to determine what their payments would be.
Both full-time and part-time workers reported a lack of awareness, regarding the value of State Pension payments with the knowledge gap being significant between those owning their own home (38% unsure) and people renting - both private and council tenants, (50%) or those living with parents or family (54%).
Pre-retirees in the dark
Those who are not yet retired are similarly in the dark, with almost three in 10 (28%) stating they don’t know what their State Pension age is, and 44 er cent unaware of the amount they’ll receive from the State Pension when they retire.
Dean Butler, Managing Director for Customer at Standard Life, said: “Questions around whether the State Pension should rise with inflation in what’s known as the ‘Triple Lock’ were constant last autumn, and now the Government is looking at whether to bring forward the planned rise in State Pension age to 68.
“In an environment where change is the one constant, it’s easy to understand how consumers are overwhelmed and might struggle to seek information about the value of their State Pension entitlements, and when they’ll qualify for payment.
“With the State Pension making an important contribution to most peoples’ money in retirement, knowing how much you’ll receive is crucial when planning for the future.”
State Pension need-to-knows
Dean Butler outlines the need-to-know information about the State Pension.
What is the State Pension?
The State Pension is an amount paid to you every four weeks by the UK Government once you reach the State Pension age. However, not everyone can get the full State Pension and it might not be enough to live on by itself, therefore it’s important to know what your State Pension might be, when you can claim it, and how it will stack up with your other retirement savings.
What’s the current State Pension amount?
The current Basic State Pension amount is £141.85 a week for the 2022/2023 tax year. It’s worth keeping in mind that the amount you’ll get depends on your National Insurance record and how many qualifying years you have. 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.
Dean added: “It is possible in some circumstances to top up your National Insurance record, and your State Pension forecast will highlight when this is an option.”
When can I get the State Pension?
The State Pension age rose to 66 last year and at the moment it’s set to rise to 67 by 2028 and to 68 between 2044 and 2046. However, there’s a review currently being carried out looking at whether the existing timetable remains appropriate, with the findings expected to be published in May.
You can use the UK Government’s calculator to check when you'll reach State Pension age. If you don’t want to take your State Pension immediately, you can also choose to defer it. This means you could get larger payments when you do start claiming it, which might suit you depending on your circumstances.
How do I claim my State Pension?
You will not get your new State Pension automatically - you have to claim it. You should get a letter no later than two months before you reach State Pension age, outlining what you need to do.
If you have not received an invitation letter, but you are within three months of reaching your State Pension age, you can still make a claim, and the quickest way to do this is online here.
To complete your claim, you’ll need the following details:
- the date of your most recent marriage, civil partnership or divorce
- the dates of any time spent living or working abroad
- your bank or building society details
- the invitation code from the letter about getting your State Pension.
When will the State Pension be paid to me?
After you’ve made a claim you will get a letter about your payments, which will usually be paid every four weeks into an account of your choice, and you’re paid in arrears.
The day your pension is paid depends on your National Insurance number, although you might be paid earlier if your normal payment day falls on a bank holiday.
Last two digits of your National Insurance number:
- 00 to 19 - paid on a Monday
- 20 to 39 - paid on a Tuesday
- 40 to 59 - paid on a Wednesday
- 60 to 79 - paid on a Thursday
- 80 to 99 - paid on a Friday
Will the State Pension be enough to fund my retirement?
The reality is there’s a significant gap between what you get from the State Pension and what you may actually need or want in retirement.
The State Pension alone will only cover a very basic lifestyle and, because it only starts in your late 60s, won’t help to support you if you want to retire earlier.
It should therefore only form part of your overall retirement plan, and so it’s important to fully understand how much you might need to save into your personal or workplace pension plan to potentially be able to afford the retirement you want.
To give you some idea of this, try using a pension calculator which can help you see if you’re on track.
To keep up to date with the latest State Pension news, join our Money Saving Scotland Facebook page here, or subscribe to our newsletter which goes out daily, Monday to Friday - sign up here.
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