People who are entering retirement are being warned they need to act if they actually want to get a state pension.
Newly released figures from the Department for Work and Pensions (DWP) indicate that 13 million older individuals in the UK are currently being supported by the State Pension. Yet the benefit, available to both genders once they reach the retirement age threshold of 66 and have at least 10 years of National Insurance Contributions, isn’t granted without action from retirees.
The DWP urges those approaching retirement to actively claim their State Pension to avoid delaying their initial weekly payment of up to £221.20, or £884.80 every four weeks. Some people might opt to delay claiming their pension if they continue working to boost their savings, especially if they haven’t reached a full 35 years’ worth of contributions or were ‘contracted out’.
According to DWP guidance: “You do not get your State Pension automatically – you have to claim it. You should get a letter no later than two months before you reach State Pension age, telling you what to do.”
Deferring your State Pension
Moreover, there is an option to defer one’s State Pension according to official advice: “If you want to defer, you do not have to do anything. Your pension will automatically be deferred until you claim it.”
If you fail to respond to the correspondence confirming your desire to start your State Pension, no payments will be made. The DWP interprets a lack of response as an indication that you wish to defer, reports the Daily Record.
Deferring your State Pension can increase the weekly amount you receive when you do claim it, provided you defer for at least nine weeks. For every nine weeks you delay claiming, your State Pension increases by about 1%, which equates to nearly 5.8% for a full year.
When you begin receiving it, the increase from deferral is included with your regular State Pension payment. However, keep in mind that any extra money from deferring could be taxable – more details are available on GOV.UK.
It’s also worth noting that deferred State Pensions rise annually with September’s Consumer Price Index (CPI) inflation figure and not according to the highest benchmark of the Triple Lock policy.
First state pension payment
Your first state pension payment will be within five weeks of reaching State Pension age and you will receive a full payment every four weeks thereafter.
You may receive part of a payment before your first full payment. The letter will inform you of what to expect.
You can also opt to receive your State Pension payments weekly or fortnightly, which will result in a shorter delay for the first payment.
Qualifying years
If you have qualifying years on your National Insurance record as of April 5, 2016, the Department for Work and Pensions (DWP) calculates a ‘starting amount’ for your new State Pension. This is either:
- the amount you would have got under the previous State Pension system up to 6 April 2016, or
- the amount you would get on your record to 6 April 2016 if the new State Pension had been in place at the start of your working life
How can I find out how much State Pension I could get?
You can obtain a personalised State Pension forecast online from the Check your State Pension service here. This provides details such as your State Pension age, an estimate of how much State Pension you may receive at that time and whether you can increase this amount.
It also allows you to view your National Insurance contribution history. More information about deferring your State Pension can be found on the GOV.UK website here.
