State pension: Your questions answered
WE’VE teamed up with Andrew Tully, technical expert at financial giant Canada Life, to answer some of your recent questions on the state pension.
Q
HOW much will I receive in state pension? A
THE new pension was introduced in April 2016 and is currently worth £175.20 per week for those who qualify for the full amount. To show how valuable the state pension is, it would ‘cost’ you around £302,000 if you were looking to generate that annual income (and rising each year) using an annuity.
Q
WILL I receive the full amount automatically? A
NO, you will only receive the full amount if you have a full 35-year national insurance record and haven’t previously been contracted out.
To complicate matters further there was a significant change to state pensions for those reaching pensionable age after April 2016.
If you had qualifying work years before April 5, 2016, the DWP works out your “starting amount” on the new pension.
It is the higher of two amounts:
■ What you would have got under the previous state pension system up to April 6, 2016 (30 years) plus an allowance for the new scheme for years worked after 2016.
■ Or it’s the amount you get on your record if the new state pension had been in place at the start of your working life (35 years).
So, your starting amount could be less than, more than or equal to the full new state pension – yes, we know, it’s utter confusion.
Q
HOW can I check out what I’m going to receive? A
YOU can get a pension forecast by filling in form BR19 available at gov.uk.
The DWP will inform you four months away from your state pension age; do nothing and you will automatically defer payments.
At the moment benefits have a triple lock rising in line with the highest of a fixed 2.5% or average earnings or inflation.
There has been speculation that we will move to a double lock in future – a less generous system – but that has yet to be confirmed.
Q
WHEN can I start claiming the state pension? A
FOR men and women the current state pension age is in the middle of moving from age 65 to 66. It will reach age 66 for men and women by October, and then increase to 67 for men and women by March 2028.
It’s intended that it will then increase to 68 for both men and women by March 2046 (affecting people born after April 5, 1977), although this hasn’t been confirmed.
Q
CAN I defer payment if I’m planning to continue working? A
YOU can defer but it must be for at least nine weeks, giving you a 1% increase – so around 5.8% for each year you defer.
The extra amount is paid as income with your regular state pension and is taxable.