The State Pension is changing in the new tax year. The amount you can get will rise in April and changes to the State Pension age are also being considered. The information here is based on our understanding in February 2023 and is here to help, but should not be taken as financial advice.
Knowing what to expect from your future State Pension and when you can expect to get it, can be an important part of planning for your life after work. Over the history of the State Pension in the UK there have been many important changes to what you get, when you get it and how you claim it.
This will hopefully keep you up to date with the latest changes and help you understand the role a State Pension can play in funding your life after work.
How much will I get?
The latest change announced was the reinstatement of the triple which will come into effect in the new tax year – starting on 6 April, 2023. It means that the State Pension will rise in line with September’s inflation rate – 10.1% - which is the biggest ever increase to the State Pension. This was confirmed in last year's Autumn Statement and affects people eligible for the new flat-rate State Pension, which was introduced in April 2016, or the older basic State Pension. The rise means that those qualifying for a full new State Pension will receive £203.85 a week (up from £185.15). And those who reached State Pension age before April 2016, who are on the older basic State Pension, will now receive £156.20 – up from £141.85. You can check your own State Pension forecast on the government’s website.
How do I qualify for a full State Pension?
The amount of State Pension you receive is based on the number of years of National Insurance (NIC) contributions you have paid or been credited with and when you start claiming it. To qualify for a full new state pension, you will need to have 35 qualifying years. You will get a part of the new state pension if you have between 10 and 35 qualifying years. There are government websites where you can check your personal NI record and get your State Pension forecast..
Can I make up for any missing years of contributions?
Gaps in your work history or being in certain types of pension schemes can mean you may not have enough NIC contributions to receive the full State Pension. You may, however, get NIC credits for years when you were not employed or had low earnings. In some cases, claiming benefits such as jobseekers’ allowance can actually help you build and protect your State Pension entitlement.
You might also be able to top up your NI record by paying voluntary national insurance contributions. The deadline for this is 5 April each year so make sure you do it soon if you are planning to. You can find more detail at www.gov.uk/check-national-insurance-record.
Changes to the State Pension age
Your State Pension age is the earliest age you can start receiving State Pension. You can check your State Pension age on the UK Government’s website.
Men born before 6 April, 1951 and women born before 6 April, 1953 can claim the basic State Pension now. If you were born on or after these dates, you will be eligible for the new State Pension when you reach your State Pension age. State Pension age rose to 66 last year but it’s regularly reviewed to take into account things like affordability and life expectancy. It’s currently under review and is predicted to rise to 68 sooner than expected. Any change would have to be approved by the UK parliament but you can read more here about how the State Pension age increase proposals might affect you.
Remember that modern, flexible workplace and personal pension plans normally let you start taking your money from the age of 55, rising to 57 in 2028. You could, therefore, access your pension benefits before you receive your State Pension.
What can I do to help make sure that I have enough money when I retire?
Make sure that you are informed so that you know what you are likely to get from your State Pension, and when. Bear in mind that you might be able to top up your NIC contributions to get more. Consider the steps to potentially boost the money you will get from your personal or workplace pension plan by increasing your contributions. Some employers also offer matching schemes, so doing this could mean your employer will pay in more too.
Do not forget that you can also use savings such as ISAs (Individual Savings Accounts) to supplement the money you will get from any pensions that you have when you come to retirement age. Remember that personal or workplace pension plans, 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 what was paid in.
It is a good idea to regularly review your personal or workplace pension plan to make sure it is on track.
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