In simple terms, your State Pension Forecast estimates how much State Pension you'll get from the government at your State Retirement Age. It is therefore a good idea to receive a projection of your likely income from the State, to help inform your wider retirement planning.
You can receive your forecast immediately online on the gov.uk site which has a ‘Check your State Pension’ online service here. You will need to prove your identity on the website, which you can do by signing in with your Government Gateway ID, or via Gov.uk Verify if you already have an account.
Alternatively you can complete a paper based application; through the ‘BR19 form’ which you can find here and you will receive your forecast in the post within 10 working days.
What is my State Pension Age?
This is the earliest date you can start to receive your State Pension and is based on your gender and date of birth – you can check this here. The State Pension Age is rising from 65 to 68 with further plans to change the State Pension Age which have yet to be agreed.
How much is my State Pension likely to be?
Your State Pension is based on your National Insurance Contributions record.
If you have retired or are retiring after 6th April 2016; under current rules you need to have a minimum of 10 full years of National Insurance Contributions for you to receive any State Pension. Your forecast will show the number of full years, along with years of any partial contributions which you can ‘top-up’.
As I write this article (in the 2018/19 tax year); you need 35 qualifying years (i.e. full years) of National Insurance Contributions to receive the full amount of State Pension which is £164.35 per week - or £8,546.20 per year.
If you don’t have the full 35 years of contributions, you will receive a pro-rata amount. For example, if you have 20 years of National Insurance Contributions your State Pension would be 20/35 x £164.35 = £93.91 per week.
Pension credit is available which provides a minimum level of weekly income and is not dependent on your National Insurance Record; £163 per week for single people and £248.80 per week for couples. However, if you have any other income or savings amounts over £10,000 this will reduce the amount of any potential weekly income you could receive.
The New State Pension
A New State Pension system came into effect from 6th April 2016. If your State Pension Age is after that date and you receive a forecast, this will compare the amounts you would have got under the old system with that due under the new system. There is transitional protection under these circumstances, with you receiving the higher of these amounts.
Prior to 2016; you could choose to ‘Contract-Out’ of the State Additional Pension. If you had done this your forecast statement will also show a Contracted-Out Pension Equivalent (COPE), which is the weekly pension amount you may receive from the pension scheme that you used to contract out. That pension scheme will pay your COPE and the government will pay you your new State Pension.
The State Pension and its tax treatment
The State Pension is taxable at your marginal rate; either 20%, 40% or 45% depending on your other sources of income - it is paid to you gross (without any tax deducted).
How can I get professional advice on my Pensions and Retirement Planning?
While the State Pension is not likely to be enough to support your lifestyle in retirement, it can certainly supplement any investment income and other pension income you have built up over the years.
A key aim for many of our clients is to have the confidence that they will have the income in retirement that can support them and their wider family to the lifestyle that they desire.
We provide independent financial advice to help our clients, plan, measure and achieve their retirement goals.
Please contact us at firstname.lastname@example.org or call us on 01223 792 196 to arrange an initial appointment, at no cost to yourself, with one of our Independent Financial Advisers.
About Martin-Redman Partners
We are a team of experienced Independent Financial Advisers who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas ranging from investments to retirement planning, to complex estate planning advice.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.