By Rachel Efetha, Chartered Financial Adviser.
You’ll be able to claim the new State Pension if you’re a man born on or after 6 April 1951 or a woman born on or after 6 April 1953. If you were born earlier than that, you’ll get your pension under the old rules.
To qualify, you need to have paid enough National Insurance Contributions for at least 10 years, or have received credit because, for example, you were ill, unemployed or caring for someone.
The new State Pension is £159.55 per week and so many clients presume that they are going to receive the full amount. However, this is dependent upon having 35 years qualifying years and not having been contracted out of the State Earnings Related Pension Scheme or State 2nd Pension.
How can I check my entitlement.
You can also check your National Insurance contribution history and rectify any errors, or decide whether to pay voluntary contributions if you are a few years short.
An important planning aspect to note is that, if you (or your spouse) does not work as they are looking after children for whom child benefit is payable, then they will receive national insurance credits. If you (or your spouse) earns over £50,000 and has elected not to receive child benefit due to the child benefit tax charge, then the non-working spouse will not receive national insurance credits. Therefore, it is essential that you claim the child benefit, and then pay the tax penalty due for earning over £50,000. It makes no difference to your overall income right now, but will potentially make a £91 per week difference at state pension age! (£4.56 state pension accrual per year x 20 years – assuming two children in further education two years age difference)
Will just my State Pension be enough.
Finally, a married couple with full state pension each, will have an income in retirement of £16,593.20 per annum, or £1,382.76 per month. Whilst this may pay the bills, will it really give you the lifestyle you dream about during retirement? The long hazy summer days on the golf course? The weekends away at the coast or midweek city breaks abroad?
How about if you want early retirement? The State Pension age currently ranges from 63 – 68, depending on your date of birth. Check your State Pension age here. How are you going to fund that?
How Rachel can help you with your retirement planning.
If you aren’t already reviewing your pension provision at least once a year with a suitably qualified Independent Financial Adviser, then make this your New Year’s Resolution.
Why not contact me to arrange a review of your present financial situation and discuss your plans for the future. Meetings can be arranged at your home or workplace at a time that is convenient to you. I also make use of meeting rooms in Bedford. The first meeting is free.
Anstee & Co have offices in-