The State Pension – here’s what you need to know
MoneyPlus Features Team | July 7, 2019
Time to read: 5 minutes
Knowing what you can expect from your State Pension, and when, can help you plan better for an income in your life after work. It’s gone through big changes in recent years but you can find out what you can expect with a simple online check – just as 13 million others already have.
The State Pension has been around for more than a century but what you get and when you can get it has changed a lot over the years, most recently with the Government introducing a new flat-rate State Pension in April 2016.
Here are some basics, to help you know what you might get and how this will support your income needs in the future.
How much State Pension am I likely to get?
In April 2019 the full State Pension rose to £168.60 a week, up from £164.35. It is based on you having paid or been credited with 35 years of National Insurance (NI) contributions.
But, although it’s called the flat-rate State Pension, not everyone gets the full amount. How much you will actually get depends on your own NI record and when you start claiming it.
Some people may have already built up a higher entitlement to State Pension under the old rules, and where this applies, it will be protected.
How can I check what I should get?
It’s easy to check your NI record online or your State Pension forecast, just like more than 13 million other people have already done at www.gov.uk/check-state-pension.
Can I make up for any gaps in my work history?
Gaps in your work history or being in certain types of pension schemes can mean you’d get less, but you can also be credited with years while you’re not employed or have low earnings.
Claiming certain benefits, such as child benefit or jobseeker’s allowance, can actually help you build and protect your State Pension in some cases.
How registering for child benefit can help your State Pension
Hundreds of thousands may be losing out on some of their State Pension because they opted out of receiving child benefit. In many cases parents thought a tax charge affecting those earning more than £50,000 would cancel out the benefit.
But registering for child benefit, even if you choose not to claim it, or end up having to pay some or all of it back through the tax charge, can help you build your State Pension through NI credits. You can read more in our article Mind the pensions gap – helping men and women save enough or visit Gov.UK to make a claim or use the Child Benefit tax calculator.
Another little-known fact is that working-age grandparents who care for grandchildren under 12 can get NI credits to top up their State Pension. You can find out more about National Insurance credits and how to apply at Gov.uk.
At what age will I get the State Pension?
It’s now the same for men and for women at 65 and will increase to 66 by October 2020. A further increase is expected to age 67 between 2026 and 2028.
Modern, flexible workplace and personal pensions normally let you start to take your money from the age of 55, although this could also change in the future.
Is the State Pension likely to be enough?
Probably not. The reality is the State Pension is a lot less than a minimum wage salary at around £8,500 a year for most people.
It’s unlikely to give you the kind of lifestyle you might have in mind, especially if you want to retire earlier than your late 60s.
What you can do to make sure you will have enough
Firstly, get informed so that you know what you’re likely to get from your State Pension, and when. You might be able to top up your NI contributions to get more.
Taking some steps to boost your potential retirement income now, perhaps by increasing contributions to a private or workplace pension, or savings such as Individual Savings Accounts (ISAs) means your ‘future self’ will very likely thank you.
You have more choice and flexibility when it comes to taking an income from your life savings, which you can usually do much earlier than the State Pension.
Personal and workplace pensions, as well as some types of ISAs, are investments and their value can go down as well as up and may be worth less than was paid in. Tax and legislation may change and your personal circumstance also have an impact on your tax treatment. The information here is based on our understanding in July 2019 and shouldn’t be taken as financial advice.