Make the most of the Basic State Pension

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The Basic State Pension is money you get from the Government when you reach a certain age. On current rates (for the 2012/13 tax year) it provides a maximum weekly income of £107.45 a week. You'll only qualify for the maximum amount if you have built up enough qualifying years and paid enough National Insurance (NI) contributions before State Pension age.

To find out how much of the Basic State Pension you’re entitled to, get a State Pension forecast. If you’re more than four months away from retirement you can get a forecast online from GOV.UK.

You might find you don’t qualify for the full Basic State Pension if you don’t have enough qualifying years and there are gaps in your NI record. For each qualifying year that you have earned, you will get some Basic State Pension. But don’t panic because you can make up the shortfall by buying missing years with voluntary NI contributions.

When to start
You'll also need to think about when to take your Basic State Pension. You won't be entitled to start receiving any income until you reach the State Pension age. You can find out when this will be at the GOV.UK website. However, by delaying when you take the State Pension, you could receive a significantly higher income.

If deferring your State Pension makes sense, you have two choices: receive a higher weekly state pension at a later date or take an extra lump sum payment now. If you go for the lump sum option, you'll receive the State Pension at the normal rate when you eventually start taking it. 

Even if you have already started claiming, you can choose to stop receiving benefits for a time to build up an extra income or lump sum.

To receive extra weekly State Pension, you must defer for at least five weeks. However, if you want to receive a lump sum payment, you must put it off for a minimum of a year.

Other benefits
On top of the Basic State Pension you may qualify for a host of other benefits when you retire, depending on how much income you have. Extra cash for pensioners is available to cover the cost of heating, travel, health, TV licensing, as well as Pension Credit which can be a welcome boost to your State Pension if you're on a low income in retirement.

You can find out more about these at the GOV.UK website.

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Tips on this task (3)

  • Glasgow43
    Love rating 1
    Glasgow43 said

    Here's a tip - don't EVER rely on the government Pension forecast! Despite having been paid a certain amount that include SERPS, over several years that was never previously questioned, some bright spark at DWP claims to have discovered an "anomaly" that means my pension would be about 15% LOWER. No indication as to WHAT or WHY, no explanation or advice on what I will get on the NEXT payment day (my bank manager is VERY interested as he's looking to take his regular money from my account under the agreements I made when the Government "backed" my future income. Now, that income looks uncertain (certainly unspecified) So inflation racing, fixed income pensioners ESPECIALLY hit (old folk - please don't ever, in future, think you have an "agreement" with the government. OAPs are an easy target.) My income will be at least 20% DOWN on last year. (Thinks. I wonder if the Poll Tax people, Tesco and the Utilities will accept 80% of my future bills?)

    Report on 13 April 2011  |  Love thisLove  0 love
  • Basia02a
    Love rating 49
    Basia02a said

    Warning - trying to anticipate and plan for the state pension is impossible and very risky at the moment after decades of stability it is all changing.

    In 2005 I was made redundant and gave up being employed - example -

    A customer took early retirement at the time, and was buying back the three National Insurance years he was missing - a good deal. About five years later the qualiification for the full pension was changed to 30 years - money down the drain as he qualified anyway.

    For once - 'Eureka' for the first time in my life I had benefited from the perfect National Insurance record ( had just over 30 years), and paid just enough to get the full pension under the new rules.

    Now the £140 is on the horizon. Good news? They have yet to decide how to cater for people with SERPS money and its predecessor, of which I have a little. They are possibly upping the qualification to 35 years(?) I won't get a full pension? I will loose my serps contributions? I will be worse or better off? Who knows?

    Any more changes to the retirement age - mine is now 66 I think. Any women my age have gone from 60 to 66

    It took 3 months for the National Insurance to send me a record of my contributions and how I could buy back years - worth it - who knows? After this I entered the figure on the pension calc and discovered it is only using the current system (not the £140 one) and says I will get a full pension - wasted my time there didn't I !

    I am surprised that no one has flagged the unfairness of contracting out. I was pursuaded to do this, and after 10 years it became a poor bet. However, if those who stayed in are going to find that Serps is now included in the £140 pension - ie they get nothing more, then contracting out was a plus as you will get the contracted out private pension and the £140 as well.

    I suspect Georgie and his men are battling to sort this out - good luck!

    Report on 18 September 2013  |  Love thisLove  0 love
  • AlanThomas
    Love rating 38
    AlanThomas said

    With any 'pension' scheme ask questions 3 to 4 months before you anticipate any sort of decision.

    I missed a monthly standing order to one of my private pensions...I received a letter from the company as to why I missed the payment...fair enough! But when I write to the same company for a yearly statement it takes 3 months for a reply!!!

    Report on 21 October 2013  |  Love thisLove  0 love

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