Some Brits could receive as little as £68.90 a week in state pension – well below the full rate of £241.30 – depending on their record.
Pensions remain one of the most widely discussed financial topics. With pension regulations changing as recently as this month and pension-related policies frequently shaping political campaigns, staying informed can prove challenging, leaving many Brits feeling bewildered and uncertain.
Antonia Medlicott, founder and managing director of financial education specialists Investing Insiders, has addressed some of the most frequently asked questions about pensions, providing her expert guidance on matters including expected state pension amounts and the recommended savings target for a private pension.
How much is the state pension?
Antonia said: “The full rate of state pension currently sits at £241.30 a week, equating to £12,547.60 a year, and it increases through the triple lock each year. However, this rate is only achieved if you have 35 qualifying years on your National Insurance record, either through contributions made from working, paying voluntary contributions, or getting National Insurance credits.
“If you have less than 35 qualifying years, the amount of state pension you receive is reduced accordingly, with the minimum being around £68.90 per week with 10 years of contributions. The Government website offers a pension calculator service to help you find out how much you may be entitled to.”
How can I find old pensions?
Antonia said: “With over £31 billion in lost pensions yet to be claimed in the UK, finding old pensions may initially seem like a daunting task, but recent tools have made it far easier than it used to be. Your first step is to uncover the names of the pension providers used by your previous employment. Do this through online pension tracking services, old paperwork, and emails.
“From here, you can begin to contact these providers to get more information on the pensions you have with them – just be sure to have your National Insurance number, previous addresses, and the dates you worked for the relevant company to hand. Some free services will do everything for you, including locating lost pots, contacting your old providers, and bringing them all under your control in an easier-to-manage account.
“Once you have your pensions tracked down, you should consider combining them to make them easier to manage in the future, and potentially reduce the number of fees. However, be sure to speak with an expert advisor first, as it may not always be the best financial move depending on your circumstances.”
How much do I need in my pension to retire?
Antonia said: “While circumstances vary from person to person, the state pension is really only designed to cover your basic needs. The general rule of thumb is to have a pension pot consisting of around 10 times your annual salary before you retire in order to have a moderate to comfortable standard of living.
“An annual pension income of around £31,700 for a single person, or £43,900 for a couple, puts you in the ‘moderate lifestyle’ bracket, allowing for more financial stability and flexibility than solely relying on the state pension. For a ‘comfortable lifestyle’, this amount rises to £43,900 for a single person and £60,600 for a couple, offering more financial freedom and allowing for more luxuries to enter your budget.”
When will I receive the state pension?
Antonia said: “Currently, the age at which you’re eligible to receive your state pension sits at 66. However, this is expected to increase to 67 by March 2028, so it all depends on your age now. If you’re unsure of the specific point at which you’ll be eligible, a pension age calculator is available on the Government website to give you the exact age.
“It’s also worth noting that, pending ongoing review, this age is projected to rise again to 68 between 2044 and 2046, so those who will become eligible for their state pension around this time will want to factor this change into their plans.”
What is Pension Credit?
Antonia said: “Pension Credit is a benefit available to those over the state pension age who are on a low income, and is completely separate from your state pension itself. It’s a means-tested benefit that’s used to top up your income, with the main form of eligibility coming from your average income. Singles with an income below £238 a week and couples with a joint income below £363.25 are eligible to claim for it, increasing income to these values.
“Additional Pension Credit is also available for people living with certain other circumstances, and those who receive Pension Credit may also be eligible for other support, including Council Tax reduction and Housing Benefit, so it’s important to explore all of the options available.”
