APPROACHING
Ensuring you get the most
from your state pension
Many retirees assume that while they can make increasingly flexible
arrangements for their personal and employment pensions, their state
pension is largely out of their hands.
Certainly, the rates are set by the government along
with the age at which people become eligible.
However, there are ways that retirees can make their
state pension work harder for them.
Perhaps the easiest way to boost your state pension is
to defer the age at which you retire. This has some
other advantages: those that work beyond state
pension age don’t pay national insurance and
therefore get to keep a greater share of their earnings.
This means that you may be able to work fewer hours,
but keep the same income. Also, the state pension is
taxable, so if you take it while you are still working,
you may have to pay a higher tax rate.
Delaying the point at which you take the
state pension by even a year or two can
boost the amount you receive.
To illustrate, the state pension is currently £115.95 a
week for a single person.
For every five weeks you defer, your future
weekly allowance is increased by 1 per cent.
So delay for a year and you get the full pension
plus 10.4 per cent extra (£128).
There are proposals by the government to
reduce this allowance to 5.8 per cent for
anyone retiring after 2016, but these have not
yet been introduced.
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Deferring your pension for a year or more also
introduces the possibility of getting a lump sum when
you do finally claim, rather than a higher pension. This
may be an option if you believe you can invest the
money to generate a higher income, or if you have
large and expensive debts. In these ways, the state
pension can be more flexible than you may expect.
From 12 October 2015 to 5 April 2017, you will be able
to apply to make a Class 3A voluntary contribution to
top up your state pension by up to £25 per week.
Key points
If you’re short on funds, can you retire later?
Until April 2017, you can top up your
state pension
If you’re in retirement now, you can top up
your state pension by up to £25 per week
More details are available here:
www.gov.uk/state-pension-topup