Information in this section will help you plan your retirement income. It explains how to work out the amount you might get when you retire so you can plan ahead.
RETIREMENT PLANNING: It is easy to neglect saving enough money for later life. Planning for retirement is best done from an early age.
A pension is a wise method of planning retirement income. As a rule, you can get money from:
In some cases, the State Pension alone may not provide enough money when you retire. That is why it is smart to check how much you will need ahead of your retirement.
Those who you reach State Pension age on or after the 6th of April 2016 will claim the new State Pension. You can get a State Pension Statement to check how much you might get.
There is a way to check online how much your pension could be worth. Follow the link to use the Money Advice Service pension calculator. The estimator tool will show you:
There is no limit on how many pension schemes you pay into. The determining factor is the amount of money you can set aside. As a rule, you get tax relief on private pension contributions - up to certain limits.
Your pension options if you reached the State Pension age before the 6th of April 2016.
Your pension options if you reach the State Pension age on or after the 6th of April 2016.
What are workplace pensions and personal pensions (or stakeholder pensions)? They are methods of planning a retirement income on top of the State Pension.
As a rule, the income amount from most occupational and personal pensions depends on:
Some employers offer their workers an option to join a workplace pension. They can also add contributions on top of what their staff pay.
Often, the workers can make extra payments to boost their own pension pot. The big advantage of workplace pensions is their automatic protection against risks.
Note: The United Kingdom Government introduced new changes to the law on workplace pensions in 2018. Thus, employers must automatically enrol staff who meet certain criteria for a scheme.
There are several advantages of having a personal or stakeholder pension. They include:
Employers may offer stakeholder or private pensions as well as their workplace pensions. All stakeholder pensions must meet certain standards set out by the government in the United Kingdom.
The Pension Tracing Service can try to help you trace a lost pension that you already paid into.
Your pension provider will confirm whether you can nominate someone to get funds from your pension pot after you die. You will need to check certain rules in the scheme, such as:
In some cases, the pension provider can pay the money to a third party. The obvious reason would be if the nominated person has since died.
Nominating a person to get your pension after you die may have tax implications. You may need to pay tax on a private pension you inherit through someone else's death.
Your National Insurance record will determine how much of the new State Pension you will get. NI contributions or credits made before 6th of April 2016 still count towards the new State Pension.
Note: As a rule, you need at least 10 qualifying years of National Insurance contributions or credits to qualify for any State Pension.
One option of reaching State Pension age is being able to defer the State Pension (delay payments). The advantage of doing this is getting more money for each year the pension gets deferred.
Older people who are getting a low income may qualify for Pension Credit. It helps to ensure they get a minimum amount each week. The application means showing all sources of income (e.g. personal savings). Those who get Pension Credit may qualify for other benefits entitlements as well.
The government over 80 Pension helps those with no State Pension (or very little income from one). The current amount for people getting the over 80s Pension is £75.50 a week. But, you will not qualify if you reach State Pension age on or after the 6th of April 2016.
UK employment legislation does not force you to stop working at State Pension age. In this case, you do not need to pay National Insurance. An exception applies to those who are self-employed and paying Class 4 contributions.
The law also protects your discrimination rights after you reach State Pension age. You can choose to stay in your job or you can get a new one.
The government call it State Pension age because there is no official retirement age in the UK. As a rule, you have the right to work for as long as you can - and want to.
But, there are certain circumstances whereby employers can set a compulsory retirement age - if they choose to do so. Even so, employers cannot make workers redundant because of their age 'only'.
The law does not force you to give your date of birth if you apply for a new job. Employers cannot force you to give them this personal information if you prefer not to.
In most cases, employers cannot set an age limit for a specific job. It may be legal if they can justify it or it is set out by law. Examples would include jobs requiring certain physical abilities (e.g. the fire service).
Note: Even after you reach the State Pension age you can still request flexible working hours.
There are several key areas to get help when planning for a pension and retirement income, such as:
Contact Pension Wise for expert information about personal pension options. Those who are over 50 can book a free appointment. But, Pension Wise do not cover 'final salary', 'career average' pensions or the State Pension.
The company 'Unbiased' can help you find a financial adviser but there is usually a fee to pay for their services.
Note: Your pension provider will tell you if you qualify for taking money out if a pension to pay for legal advice. If so, you can withdraw up to £500 per year to pay for financial advice on retirement planning. You can do this three (3) separate times without a acquiring a tax charge.
Planning for Retirement Income in the United Kingdom