The Beginner’s Guide to the State Pension
The Beginner’s Guide to the State Pension
Are you starting to think about what life will look like when you’re not working anymore? With talk about the state pension and changes suggested by politicians in the latest general election, such as the triple lock system, it’s a major topic right now. But what do these terms really mean for you? This guide will clear up the basics of the state pension and the triple lock, showing you what you can expect to receive and when.
At Hansford Bell, our team of experienced Chartered Financial Planners based in Tavistock offers clear, straightforward advice. We understand how important it is to be keyed-in on your pension. Our dedicated professionals focus on your life goals, providing transparent and uncomplicated guidance for topics like having a smooth retirement.
To make life easier and upgrade your financial security, contact our friendly team for a free consultation.
Understanding the State Pension
What is the State Pension?
The State Pension is a weekly payment from the UK Government that you can get when you reach a certain age. Think of it as a basic safety net that gives you a steady income after you retire, helping you cover your living costs.
Eligibility and Claiming Age
- Current Eligibility: To qualify for any State Pension, you need at least 10 years where you have paid National Insurance. However, to get the full State Pension, you usually need 35 years of contributions.
- Age Requirements: Controversially, the age when you can start using the State Pension is gradually increasing. It used to be 65, but changes are being made to raise this age to 67 by the year 2028. This means you may have to work for longer before you can retire and start receiving your pension.
The Triple Lock Explained
As prices rise, the triple lock ensures that your pension grows as well. Every year, your pension will increase based on one of three factors, whichever is the highest.
First, it could increase by the rate of inflation, which is how much prices have gone up over the year. Second, it might go up by the rise in average wages, meaning how much people’s earnings have increased. Lastly, if both inflation and wage increases are low, your pension will still grow by a fixed rate of 2.5%.
This system is designed to make sure that people who receive the State Pension can continue to afford the same kinds of things each year, even if living costs go up.
Understanding your pension can feel complex. We’re here to help – get in touch today to find out more.
Other Pension Options Available in the UK
Workplace Pensions
Your job may offer a type of saving called a workplace pension. A workplace pension is a plan where both you and your employer contribute money into your pension pot. On top of that, the government adds some more through tax relief, where some of the tax you pay is given back to you and added to your pension.
If you are 22 years old or older and earn more than a certain amount, you may be automatically enrolled in this pension plan. However, you have the option to opt out if you want to. Even though you can choose to leave the plan, staying in it is usually a smart decision. It helps make sure you’re saving enough money for when you retire.
Private Pensions
With a private pension, you get to choose the provider and decide how much money to put in. You can either make a one-time payment or contribute regularly, depending on what suits you best.
Private pensions also come with tax benefits, just like workplace pensions. The more you contribute, the more you’ll enjoy tax relief. These pensions are flexible and can be a great way to save more if you have extra money to set aside. This flexibility allows you to boost your retirement savings beyond what your workplace pension offers.
Diversify your investment portfolio and support your pension income with bonds >
How Hansford Bell Can Help with Retirement Planning
The State Pension is just one part of what you might need to live comfortably after you retire. That’s where Hansford Bell can help.
First, our financial life planning service looks at everything about your finances, from your income and savings to your spending habits. By understanding your full financial picture, we can plan the best way for you to retire with ease.
Next, we take a look at your future. We can understand how your money works for you now and how it can work in the years to come. We make use of cutting-edge software to help us get the right forecast for you.
Finally, we build a roadmap to make the most of what you have now, and help bring you where you want to be.
With Hansford Bell, you’ll get a tailored approach to retirement planning that grows and adapts with you. Get in touch with our team today, and let’s make a plan that ensures you can enjoy your retirement years to the fullest.
Explore changes to pension rules in 2024 >
Find out the impact of the gender pension gap >
“Please note: this article is for informational purposes only and does not constitute advice.”
A Fresh Approach to Financial Planning and Advice.
Hansford Bell aren’t your average team of financial specialists. We take the time to get to know our clients and help them realise what they want from their life, whether that’s a personal ambition or a financial goal.
Our planners are highly experienced and know the industry inside-out. We combine simplified, straight-forward tips and guidance with cutting-edge technology and a comprehensive understanding of your situation. We focus on your finances, so you can focus on living your life.
Want to know more? Talk to us today and we can start making that dream future a reality!
