Budget 2021: Experts outline state pension changes
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The number of over-70s in the workplace has jumped by six percent to almost 500,000 in the last year, according to Salisbury House Wealth. Many are forced to work on as they desperately need to cover pension shortfalls and have no idea when they can afford to retire.
The number of over 70s in employment dropped during the pandemic as older workers shielded due to government guidelines.
This put a huge strain on their finances, particularly those with low pension savings.
Many are now being forced back to work just to make ends meet, said Salisbury managing director Tim Holmes. “Some remain in the workforce by choice but for others, it will be a necessity to boost their pension pots.”
The average pension nest egg is just £62,000, significantly lower than the £192,000 a single person needs for a comfortable requirement.
The new State Pension, available to those who retired after 6 April 2016, pays a maximum of £179.60 a week – which totals £9,339.20 a year.
The National Living Wage for the over-23s is currently £8.91 an hour, which adds up to £18,532.80 a year in a full-time job.
That’s twice as much income and the gap is even wider for those who retired before April 2016. They get a basic State Pension of just £137.60 a week, which works out at a meagre £7,155.20 a year.
Even worse, many of those on the State Pension do not get the full amount because they did not make enough qualifying National Insurance (NI) contributions during their working lifetime.
Ben Hampton, retirement advice specialist at fund manager Abrdn warned: “The State Pension is a lot less than the minimum wage for most people.”
These tips can help you make the most of the State Pension help available.
Get a State Pension forecast. You can order this online at Gov.uk/state-pension-age. Have ID handy such as your passport and driving licence, and your National Insurance number. Otherwise, print form BR19 from Gov.uk or ring the Future Pension Centre on 0800 731 0175.
Check your National Insurance record. You need to make 35 years of NI contributions during your working lifetime to get maximum State Pension.
Many people fall short, particularly women, after taking time off to raise a family or reducing working hours.
Check where you stand by visiting Gov.uk/check-national-insurance-record.
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Claim National Insurance credits. If heading for a State Pension shortfall, plug the gap by claiming NI credits.
You may be eligible for any time you spent raising children under 12, provided you were registered for child benefit, or were unable to work due to maternity leave, disability or illness.
Registered foster carers, or those caring for a sick person with disabilities for at least 20 hours a week, may also be eligible.
The unemployed who are looking for work or claiming jobseekers allowance, or those enrolled on approved full-time training may also claim.
You should get NI credits automatically but some do not. Check by calling the NI helpline on 0300 200 3500 or +44 191 203 7010 if outside the UK.
Buy extra qualifying years. Buying voluntary class 3 NI contributions will cost £800, but gives you around £250 in extra income for life, paying for itself in just over three years. You can typically backdate claims six years.
Get at least 10 years. You have to have made a minimum 10 years of NI contributions to get any State Pension at all. If you are just one or two years short, work longer or buy extra years to get at least something.
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