Your State Pension: When you’ll get it, how much you’ll get, and how to plan for it.

Blackbear Financial Group > News > Retirement Planning > Your State Pension: When you’ll get it, how much you’ll get, and how to plan for it.

In the UK, the government provides a guaranteed pension income for life – known as the state pension – paid weekly to anybody who qualifies for it after they reach state pension age.

However, the full amount available is not enough to live on for most people.

Therefore, it is vital for anybody approaching retirement or their state pension age to know how much they will receive from their state pension, and when they will start to receive it so that they can safely plan their retirement.

Do I qualify for the state pension?

You will qualify for the state pension if you have a minimum of 10 qualifying years on your National Insurance record, however, the amount you will receive increases proportionately with the number of qualifying years you have and you will receive the maximum available state pension if you have at least 35 qualifying years.

A qualifying year is an annual period during which your salary is equal to or greater than the Lower Earnings Limit (currently £6,240).

Do I need to pay NICs to qualify for the state pension?

You don’t need to have paid National Insurance Contributions (NICs) to qualify for the state pension. Because you don’t start paying NICs until you take a salary over the NIC Primary Threshold (currently £9,516), you can build up qualifying years if your salary falls between the lower earnings limit and NIC primary threshold.

Company directors, for example, save money on their NI by taking a salary between these two figures and taking the rest of their income as dividend.

How much is the state pension?

The full state pension is £9,110.40 a year (tax year 2020/21), paid weekly at £175.20. This amount rises each year at least in line with inflation, and often more. If you have fewer than 35 qualifying years, the amount you receive will be reduced proportionally.

For those that reached state pension age before the 6th of April 2016, they are currently receiving the old state pension instead, which may be a different amount.

When do I receive my state pension?

The state pension age is currently 65 for both men and women but may be different depending on when you were born. You can check your state pension age on the government’s website.

From April 2026, the state pension age will begin further increases to 66, and then to 67 by March 2028. It is expected to reach 68 by around 2044.

Can I still work and claim state pension?

You can carry on working and earning once you’ve passed state pension age and begun to draw your pension, but you’ll no longer pay National Insurance after this point. Just remember that the state pension still counts as income, so could be subject to tax depending on how much other income you continue to earn.

Managing your income tax liability if you’re working whilst taking your state pension is important because you shouldn’t waste your state pension on income tax. For comprehensive retirement and tax planning, speak with one of our advisers today.

Is there anything else I might need to know about the state pension?

There might be. There are no longer any special state pension arrangements for married couples. Each partner in the marriage or civil partnership needs to build up their own state pension and cannot benefit from their spouse’s state pension.

If one spouse does not work because they are caring for children aged under 12 and registered for child benefit (even if they don’t receive it) then they can accrue Class 3 NI credits for these years. These credits will build up qualifying years for the state pension.

Anyone who isn’t employed can pay voluntary NI contributions to build up qualifying years.

If you live abroad or are planning to move abroad and want to claim state pension, you’ll need to contact the International Pension Centre. You can then arrange for your state pension to be paid directly into a bank account, either located in the UK or in the country where you’re living now. You can choose to be paid every four or 13 weeks.

Should I wait before taking my state pension?

If you choose not to take your state pension from the state pension age, the amount you’re entitled to will gradually rise. For every year you delay it, the amount you can receive will rise by around 5.8%.

You might choose to do this if you were still working and didn’t want to lose state pension money in tax. However, this could be part of a complex and considerable set of decisions surrounding your retirement.

Most people don’t plan their retirement effectively, and they don’t know how much income they can safely live on in retirement.

The state pension is a guaranteed inflation-proofed source of income for life that will support you in retirement. But it likely is not enough for you to live on – especially if you haven’t got 35 full qualifying years.

Most people rely on a workplace or personal pension income to support them in retirement – but they don’t realise that they could be withdrawing too much income and that they’ll end up running out of money too quickly.

They could also end up paying too much tax.

So, what is the solution?

We believe cash flow forecasting is the key to securing a safe and sustainable retirement.

If you’re approaching retirement and you’re unsure how much you can live on, we can analyse your investments and pensions using the most up-to-date and comprehensive techniques available to tell you what we believe is a sustainable amount of income for your retirement.

This means that you can sleep at night knowing that you aren’t taking unnecessary risk, and that you’re always ready for whatever challenges you might face in retirement.

To learn more about our cash flow forecasting and retirement services, speak with an adviser from BlackBear Financial Group today.

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