Tip No.1 : The number of qualifying years that you need for a full UK pension is 35.
Tip No.2 : You may be entitled to a basic state pension with at least 10 years national insurance contributions.
Tip No.3 : National insurance contributions can be paid through employment, self-employment (voluntary payments) or with credits if you were receiving certain benefits
Tip No.4 : Auto-enrolment means UK staff pay 5% of their salary in to a workplace pension scheme and get a 3% top up from their employer. (7)
Tip No.5 : If you’re self-employed you pay Class 2 national insurance contributions at a flat weekly rate and Class 4 contributions annually, based on your level of taxable profits. It is worth checking you are paying the right type of contributions to make sure you have ‘paid your stamp’.
Some self employed people have been caught out as for example they have assumed their accountant has already taken care of paying the right national insurance correctly for them. You can do this online via your ‘self assessment’ portal that you can find by using the Government Gateway to sign in with HMRC.
Tip No.6 : You can download a state pension forecast from gov.uk/check-state-pension
Tip No.7 : Usually you can choose to buy missing years in your contributions directly from HMRC, to maximise the pension pot you are eligible for in the future.
Tip No.8 : You can invest to accumulate: Tax expert Mike Warburton gives an example that buying an extra “years worth, which cost £780 would add £250 to your pension at current rates.” (1)
Tip No.9 : Pension dashboard services are a government initiative aimed at helping people who have had multiple employers over some years resulting in building up several small pension pots. The services will be provided by more than one organisation and will be available from some time in 2020 or early 2021. Viewing all their “lifetime pension savings in one place” will allow people to make the most of their investments. (9)
Tip No.10 : Visit the Pension Wise website if you are aged 50 or over to receive up to an hours free and impartial government guidance about your personal or workplace pension options.
Tip No.11 : Request your pension online at the Department of Work and Pensions website or by telephone on 08007317898 or letter when you get to a few months before the age of 65. After October 2020 this changes to 66 or 67 after the rise scheduled between 2026 and 2028. (2)
Tip No.12 : You only need to claim your state pension in the last country where you lived or worked within the entire European Economic Area (EEA).
Tip No.13 : It is time to find work that you love and can do into what would usually be termed as ‘retirement age.’ The Centre for Social Justice has proposed “that the state pension age should rise to 70 by 2028 and 75 by 2035.” This affects people born between 6 March 1961 an 5 April 1977. (5) Anne Ashworth Property and Personal Finance Editor for The Times believes “the government is not going to raise the sate pension age to 75.” (6) However it would be sensible to be as prepared as possible just in case.
Tip No.14 : Remember you will need to pay tax on your pension if your income is over the personal allowance threshold to HMRC annually in your self assessment tax return.
(1) ‘Tax Hacks’ The Daily Telegraph Money, Mike Warburton 26 October 2019
(2) State Pension Age Calculator, Which Money website, Paul Davies, December 2019 State Pension Age Calculator
(3) ‘The New State Pension’ Gov.uk State Pension website 27 January 2020 New Satet Pension Gov UK
(4) ‘Living in the EU’ Gov.uk State Pension website 15 October 2019 Living in the EU Gov UK
(5) ‘The £84000 cost of a higher pension age’ The Times Money, Laura Whateley, The Times 24 August 2019
(6) ‘We need a pension dashboard wake-up call’ The Times Money, Anne Ashworth, Th Times 24 August 2019
(7) ‘Workplace Pensions’ Gov.uk website 27 January 2020 Workplace Pensions Gov UK
(8) ‘Welcome to Pension Wise’ Free and impartial government guidance about your defined contribution pension options. PensionWise website 27 January 2020 https://www.pensionwise.gov.uk/en
(9) ‘Pensions dashboard’ Money and Pensions Service website, 27 January 2020 Pensions dashboard MPS
(10) ‘Sign in using the Government Gateway’ Gov.uk website, 27 January 2020 Government Gateway Sign In