STATE pension payments can be checked on before they are received. The government has tools in place that can allow a person to see how much they’ll receive in retirement and what they can do to increase it.
State pension income is, for the moment, guaranteed to increase every year under the triple lock system. The triple lock rules ensure that state pensions will rise by the higher of 2.5 percent, the rate of inflation or average earnings growth every year.
However, in recent days it has been reported that Rishi Sunak and the wider government may be considering abolishing the guarantee.
Coronavirus impacts and inflationary issues could make the triple lock system very expensive and purportedly, the government is considering cutting the scheme to manage costs.
In a joint statement, the Treasury and Number 10 said: “Announcements on tax and pensions policy are for budgets.
“The government is committed to supporting pensioners.”
Earlier this year, state pension saw one of its biggest rises in recent years, rising by 3.9 percent in line with wage growth figures.
Despite what happens with triple lock rules, people can check on their individual state pensions online ahead of actually receiving it.
The government’s website has a pension forecast tool in place which can help people find out:
- How much state pension they could get
- When it can be received
- How they may be able to increase it
To use the tool, people will need to prove their identity.
This can be done by creating a “government gateway”, using a gov.uk verify account or by signing in with a digital identity from another European country.
So long as a person is more than 30 days out from reaching state pension age, they can also get a pension forecast statement by filling in the BR19 application form and posing it in.
a person’s state pension payments will be dependent on their National Insurance record.
To receive a state pension, a person needs a minimum of 10 years of contributions.
If a person has at least 35 years of contributions, they’ll receive the highest amount of £175.20.
Because of this variation, some may find that their forecasted payments will not be as high as they had hoped.
However, they do have some options for increasing it if need be.
A person can choose to defer their state pension payments by delaying their claims.
So long as it is deferred for at least nine weeks, state pension can be increased by the equivalent of one percent for every nine weeks of deferment. This would work out at just under 5.8 percent for every 52 weeks. The extra amount would then be paid with the person’s regular state pension payments.
A person may also be able to boost their National Insurance record by making voluntary contributions.
This can be don’t by paying either class two or three contributions and the payments can be backdated by up to six years.
Svenja Keller, the head of wealth planning at Killik & Co, commented on the possibility of triple lock rules changing: ” There have been rumours for a while that Rishi Sunak will end the triple lock pledge to help pay for the Covid-19 fallout, and there is no doubt that a number of significant changes lie ahead – with a possible emergency July budget to announce them. There are pensioners who fully rely on the State Pension, and one of the realities of the Coronavirus crisis is that even those with comfortable private and workplace pensions who were looking to retire in the next few years may have seen the value of their retirement pots fall. However, the last few months have upended the lives of all generations. Younger workers are more likely to have been furloughed, so some have now questioned whether a State Pension rising above the pay of workers should remain in place in its current form.
“If the triple lock is removed, those already receiving the State Pension will see less increases in their State Pension in the future. They will have to incorporate the lower increases into their financial plan although once retired, it will be more difficult to adjust the plan and make up for the lower increases from elsewhere. Therefore, they may need to consider their expenditure, as this is what they will have more immediate control over.
“The reality is, all generations need to protect their savings from inflation. It is very important that inflation is taken into account when putting financial plans together as – despite recent figures – it has a huge impact in the long-term. Younger savers have the chance to think about this now: identify and ring-fence long-term savings and make use of compounding over time.”