For people planning to retire in more than 20 years time, there's no guarantee that they can rely on the UK state pension. The UK state pension is currently available to men at the age of 65 and women at the age of 60, although from April 6th 2020, the state pensionable age for women will rise to 65. The pension is available as long as you have paid a certain amount of National Insurance (NI) contributions. If you have not made the minimum level of contribution required, you may not receive the pension.
Your NI contributions are calculated from your 16th birthday to the date you reach state retirement age. If you have not paid the maximum contributions, you have the opportunity to make up them up at a later date. The state will take into account any time you have spent in further or higher education, in a carers role or unemployed, when you are unable to pay NI contributions.
Even if you have paid all the NI contributions you need to, the UK state pension is unlikely to provide enough financial cover for a comfortable retirement. At present, the weekly UK state pension amounts to £82.05 for a single person and £131.50 for a couple. This amount increases annually in line with the retail price index, but with the number of people in retirement set to exceed the number of people in work, the benefits offered by the state pension system are likely to decrease.
For this reason, it's important that people who will be retiring any time after the next 10-15 years have pension provisions in addition to the UK state pension. Whilst you can rely on the state pension to give you a fixed amount of money on a weekly or monthly basis, you cannot rely on it to provide all the income you need. If you haven't already, it is prudent to begin making arrangements to join a company pension scheme or set up a personal pension plan, so that you are saving enough money each month to provide a good income in retirement.
You should also check your NI contributions to see if there are any periods you have missed, which you can make up by paying a lump sum to the NI contributions office. This will ensure that you receive as high a percentage of the UK state pension as possible. It is important to make sure that you are going to receive everything that you are entitled to.
If you are approaching retirement and you are concerned about your UK state pension, or if you have recently started working and you want to look at additional pension provision, you need to speak to an independent pensions adviser, who will look at your circumstances and search the market for the best pension plan for you.
Speak to a Pension Expert NOW on:
0800 044 5907