Majority confused by State Pension
Few realise what happens if you emigrate or defer your State Pension.
As a nation we are becoming increasingly reliant on our State Pensions to get us through retirement. But research has found that the vast majority of us don’t fully understand how the State Pension works and exactly what we are entitled to.
Since 1994 the number of people who are reliant on the State Pension has increased sharply. Back in the mid-1990s, 41% of the recently retired got at least half of their income from the State Pension. Now that figure has risen to 51% for individuals and three out of five pensioner couples.
Despite the importance of the State Pension, most of us still don’t fully understand how this income works, according to research from Partnership.
How your pension changes if you emigrate
For example, 77% of respondents didn’t realise that if they moved to certain countries their State Pension would be frozen.
If you decide to spend your retirement in a country within the European Economic Area, Switzerland or a handful of other countries your State Pension will continue to rise annually.
But, move elsewhere, such as Australia, South Africa, New Zealand or Canada and your income will be frozen at the level it was when you emigrated.
Take control of your pension saving with a SIPP
Boost your pension by not taking it... yet
Meanwhile more than half of the people surveyed (59%) were unaware that they could delay taking their State Pension, and that doing so would increase the amount they receive.
The truth is that if you reach State Pension age on or before 6th April 2016, your income rises by 10.4% for every year that you defer taking it. This will also be the case when the new State Pension is introduced next year. Read New State Pension to be at least £151.25 a week.
Are you entitled to the full State Pension?
Most worryingly of all many people don’t realise that they may not be entitled to the full State Pension.
Almost a third of us don’t know that you need 30 years of National Insurance contributions or credits in order to qualify for the full State Pension. That means if you stopped working to look after family you could receive a smaller State Pension.
However, while most of us know that looking after family could affect our State Pension, 43% of those surveyed didn’t know they could do anything about it. In fact, if you have taken time out from working for whatever reason you could be able to apply for credits to increase your State Pension entitlement. Alternatively, you may be able to pay voluntary national insurance contributions in order to get a full State Pension. Read How to top up your State Pension.
If you aren’t sure what you are entitled to when it comes to your State Pension read How to get a State Pension forecast.
Take control of your pension saving with a SIPP
More on pensions:
How to top up your State Pension
Comments
Be the first to comment
Do you want to comment on this article? You need to be signed in for this feature