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A personal pension plan could be a good option if you’re self-employed, which means you won’t automatically be enrolled in a workplace pension. You’ll get tax relief at the basic rate and higher rate tax payers could claim back the difference. Pensions also grow tax efficiently and you can take 25% as a tax-free lump sum on retirement. You can either make regular or lump sum payments to your provider.
If you already have a personal pension plan, ask your provider for a forecast to find out how much you’re likely to get when you retire.The amount you’ll get when you retire depends on a few different things, including how much you’ve paid in and how well the fund’s investments have done. For independent guidance, go to the Money Advice Service.
The State Pension is a regular form of income that you receive from the Government once you have reached State Pension age. The amount you receive will be based on your National Insurance contributions. The age at which you reach State Pension age varies and is dependent on when you were born. You can find more details about changes to the Pension Age and how much you could expect to get on Gov.uk
You must have reached State Pension age in order to receive the basic State Pension.
In order to receive the full amount you must have made 30 qualifying years of National Insurance contributions, or alternatively, if you are unable to work, have received credits for this time, due to reasons such as sickness, unemployment or disability.
The age at which you reach State Pension age will vary depending on when you were born.
The State Pension age was initially set at 65 for men and 60 for women. However, since 2010 the State Pension age has undergone significant change. The age for women has been steadily rising to match that of men, and by 2018 will also be 65. By October 2020, the age will again rise to 66 for both men and women.
The Pensions Act 2014 also lays out changes to the State Pension age for the future. Between April 2026 and April 2028, the age will rise from 66 to 67. The act also states that the Government will then review the State Pension age every five years. The Pension age is likely to continue to rise in line with increases in life expectancy.
Currently the most you can receive is £115.95 per week.
The amount increases each year by either 2.5%, or in line with the average percentage growth in wages in the UK or the percentage growth of prices in the UK, depending on which is the highest.
You will first need to claim for your State Pension as the payment is not automatic. Four months before you reach State Pension age you will receive a letter with details on how to make a claim. You can claim either online, over the phone or by post.
You will be paid at the end of the first full week once you reach State Pension age and, from then, you will be paid every four weeks.
The day on which your pension is paid will depend on the last 2 digits of your National Insurance Number. For example, if your National Insurance number ends in digits between 00-19, you will be paid your State Pension on Monday. If your National Insurance number ends in digits between 20-39, you will be paid your State Pension on Tuesday, and so on.
Once you reach State Pension age you can continue to work, however, you will no longer contribute to National Insurance.
If you choose to work, you will still receive your State Pension, however, you can choose to defer claiming it. If you do so, you may be eligible for extra State Pension once you choose to start claiming.
If you have not made National Insurance contributions for the requisite number of years in order to claim the full State Pension amount, you may be able to pay voluntary National Insurance contributions instead. In order to do so, you must sit within the eligible criteria. Usually, you are only able to pay for gaps in your record from the past six years.
If you are ineligible to receive the full amount but you are married or in a civil partnership, you may be able to qualify for an increase in the amount you receive through your partner’s contributions. You will both need to have reached the State Pension age, and your partner must qualify for at least some of the basic pension amount.
If you reach State Pension age on or after 6th April 2016, the new State Pension will apply. You will be of State Pension age at this time if you’re born on or after the 6th April 1951 if you are male, and born on or after the 6th April 1953 if you are female.
You’ll need at least 10 years contributing National Insurance via work or credits to receive any State Pension. To receive the full amount, you’ll need to have at least 35 qualifying years or credits.
All eligible workers are gradually being enrolled in workplace pension schemes by 2018. This means a percentage of your pay will automatically be put into the scheme each payday.
Topping up your employer scheme can often be the cheapest and easiest way to boost your pension, employers often contribute to your workplace pension too. You can ask for a pension forecast to find out how much you are likely to get.
Most people work for between five and nine employers over the course of their lives – and often they leave a pension behind when they get a new job. To plan for your retirement, you’ll need to work out how much you’ll be getting from all pensions, which means you’ll need to track any that have gone missing.
For help tracking down an old pension, contact the Pension Tracing Service or see this helpful guide from the Money Advice Service.
It’s never too early to start saving for your retirement. With people living longer than ever before, we all need to save more. But because there’s always something more urgent to pay or save for, it’s something that many of us rarely think about.
Read about our key points to consider when planning your retirement below.
Put simply, a State Pension may not be enough for you to live on in your later years. How much your State Pension is worth could depend on how many years’ National Insurance Contributions you pay while you’re working along with other criteria. You can find more details on gov.uk.
If you keep working until you’re 65, you can expect that you’ll need to live off your pension for at least 20 to 30 years. You don’t have to retire when you are 65 and your employer can’t make you. Your retirement age is different to the age that you’re eligible for a State Pension.
Work out how much you’ll need to live on once you’ve stopped working, factor in extras like bigger energy bills, healthcare and even holidays. You might not need to include things like mortgage repayments and travelling to and from work. Once you’ve done that, take a look at all the pensions you currently have.
Are you saving enough or should you be putting aside more?
Whether it be an ISA, private or workplace pension, or even investing in property, the earlier you can start saving, the more time it will give your money to grow. Leaving things until later may mean that the amount you’ll need to save is unaffordable.
Earn up to 1.50% AER/Gross p.a. (variable) with a Savings Builder when you grow your savings by £50 or more each month.
Start saving from £1, instant access to your savings. Eligibility and criteria conditions apply.
Take advantage of the 2019/2020 tax free ISA allowance of £20,000. Find out how easy tax-free savings can be with one of our ISAs.
Aged 16 and over, UK resident and must not have subscribed to a cash ISA in the same tax year.
Investment values can fall and rise, your capital is at risk. Eligibility criteria, fees and charges apply.
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