Trustnet Direct Retirement Programme | Page 25

PLANNING The state pension The state pension remains an important source of income for retirees. Paying up to £115.95 per week (15/16 tax year) for anyone with a full record of national insurance contributions, you need to ensure that you have built up your entitlement over time and make the most of it when you retire. You can currently claim the state pension when you reach 65, but the government plans to progressively raise this age from next year. The state pension age for men and women will gradually increase to reach 66 by October 2020 and then 67 between 2026 and 2028. Finally, it will increase to 68 between 2044 and 2046 (affecting people currently aged 38 and over). When you reach state pension age, you have three choices: 1 Stop working and claim your state pension 2 Continue working and claim your state pension 3 To be entitled to the full basic state pension, 30 qualifying years of national insurance contributions must be accumulated. If you have been working and paying national insurance for that time, you are almost certainly covered. National insurance credits may have been provided for unemployment, sickness or as a parent or carer. Equally, you can pay voluntary national insurance contributions to top up your qualifying years. Key points The state pension provides just enough to live on The government in the UK is at war with the welfare state, so expect more pressure on pensions You may not even qualify for a full state pension at retirement ......... Continue working and put off claiming a state pension This latter option has some advantages. If you continue working after state pension age, you don’t pay national insurance contributions, meaning you get to keep more of your income. By deferring the state pension, you may also receive a higher weekly amount – for every five weeks deferred, the future weekly allowance is increased by 1 per cent. The government is consulting to decrease this allowance, but no plans have been finalised. For more information, visit: www.gov.uk/government/uploads/system/uploads/a ttachment_data/file/181237/single-tier-pension-factsheet.pdf The new single tier state pension From 6 April 2016, the government intends to introduce a new single tier state pension, for which you will be entitled to £155.65 per week, as long as you have met the qualifying conditions. Anybody retiring before this date will fall under the existing rules and receive the pension they already qualify for. Page 25