The State Pension is all too often overlooked when considering long-term savings for your retirement. It may provide a much smaller amount when compared with personal pensions and investments, but there is no doubt it can offer the fundamentals for security in your later years. However, as much as it is accessible to all UK working citizens, you may need to do a bit of extra tweaking to get the full amount. Here are our factors you should be aware of:
1. Times away from work
The amount of State Pension you will receive will depend on the amount of National Insurance contributions you have made. A set percentage is taken off your earnings at source. In this way, your earnings are directly related to the money you receive from the government in retirement. With that in mind, be aware of periods of unemployment or unpaid absences from work. In these times you may not be making direct contributions through your employer and hence the weekly pension amount you will receive is not likely to be the maximum.
2. Self-employment
You can still claim State Pension if you are self-employed but it is not taken away from your earnings automatically. You need to include a national insurance payment when calculating your year-end accounts. This calculation when verified with the government will be a lump sum of NI contributions for the year, rather than the monthly contributions you pay when employed.
3. Checking your entitlement
Looking back on your career you may be uncertain of how long you have been absent from work and therefore unsure of whether you will be receiving the full amount of State Pension. You can check the amount of State Pension you will receive on the government website.
4. Adding more contributions
If you find that the money you will be receiving in retirement is lower than you expected, you can, if you have the funds, make voluntary contributions to bump it up.
5. National Insurance credits
If you have to be away from work because of illness or need to care for a child or adult you can claim National Insurance Credits (NIC) through benefits such as child benefit or carers credit. (if you are unemployed, Jobseekers allowance gives you NIC). You can also claim for NI credits if your spouse or partner is in the HM Forces.
6. Keep ahead of the laws
The laws concerning your pension are changing all the time. For instance, the rules changed on 6th April 2016 to make it a lot less complex to determine how much you will receive when you retire. Also, the official retirement age is continuously being pushed back so you need to keep an eye on the news so you are aware of the date your State Pension will be paid from.
7. Bolster your State Pension
The State Pension is unlikely to be enough to cover your needs and aspirations in retirement – even when you are due the maximum amount. So most people will also contribute to an occupational pension (a great way to get paying in early and receive a little extra from the government and your employer) or a personal pension. You are going to be saving for your retirement for a long time and there are likely to be many changes and issues with your pension along the way. It can be very useful to review your pension with the guidance of a regulated financial adviser, who can help you shape your long-term savings to your unique future requirements.
When thinking about your pension, speak to a regulated financial adviser such as Portafina or, view the information at the Money Advice Service.
