New research from Retirement Advantage suggests a lack of awareness among those approaching retirement over when their State Pension will be paid, and exactly how much it will be.
In a survey of 1,103 over 50s, only 39% had asked for a State Pension forecast, which will tell you:
- How much State Pension you will receive
- When you are eligible to receive it
- How to increase it, if possible
A State Pension forecast is an invaluable piece of information, serving for many as a foundation for retirement planning. Worryingly, the survey also revealed a lack of awareness of what a forecast is, with one in five not knowing.
Of the 39% of people who had asked for a State Pension forecast, one in three said that the figure was much lower than they had expected, and that they would need to supplement their income. This fact alone illustrates the importance of getting a State Pension forecast long before you retire, so you can bridge any shortfall.
The Pensions Technical Director at Retirement Advantage, Andrew Tully, commented: “These figures highlight a worrying trend among those approaching retirement. Not only are many unaware of the State Pension forecast system, but many who are aware of it have not asked for a forecast of the State Pension to which they will be entitled.”
Why is a State Pension forecast so important?
Knowledge is definitely power when it comes to your finances, and your pension is no different. Only when you know how much you will be receiving can you truly start to plan your future.
For the majority of people, the State Pension is the largest income that they will receive when they retire. If this amount isn’t high enough to fund the lifestyle that you want, then you will need to find another source of income to supplement this. Taking an ‘ignorance is bliss’ approach isn’t generally a good idea.
The full State Pension is only available to those that have built up 35 years of National Insurance Contributions (NICs), so the forecast will also reveal any gaps you may have overlooked. These gaps can be filled with voluntary NICs, ensuring that you get enough to support yourself when you retire.
So it’s all about planning?
The State Pension Age is planned to increase from to 68 by 2046, so a forecast is vital if you are considering early retirement.
The issues that women born in the 1950s are facing is a good example of the importance of planning. In 1995, the State Pension Age for women was changed from 60 to 65, the same as it was for men. The Women Against State Pension Inequality (WASPI) campaign is fighting for compensation, stating that no notice or information was given for this, and the five year wait for a State Pension threw a proverbial spanner in the works of any retirement planning they would have done.
Whilst this is maybe an extreme example, a State Pension forecast will leave you in no doubt as to exactly when you will receive a pension, meaning that any plans you make for the future will be as accurate as possible.
Mr Tulley commented: “Not all state pensions are created equal. Under the new system, the amount received depends on how many qualifying years a person has during which they made National Insurance contributions – but people require a minimum of 10 qualifying years to receive anything at all. This means the amount people are entitled to varies broadly. If we assume a 20-year retirement, a person who only has the minimum 10 qualifying years will receive £47,840, while someone with the maximum 35 years will receive £165,932.2 The fact that the range is so broad makes it especially important for people approaching retirement to use the state pension forecast system – so that their plans for retirement income aren’t scuppered by any last-minute surprises.”
So how do I get a State Pension forecast?
There are essentially three ways to get your State Pension forecast:
- Over the phone
- By post
For those wishing to request a forecast over the phone, the Future Pension Centre helpline is: 0345 3000 168. A statement can be requested, usually arriving in 10 working days.
A BR19 application form can be filled in and sent by post. The form is available to download here, or can be requested by writing to:
The Pension Service 9
Mail Handling Site A
If you would rather get your forecast online, use the GOV.UK tool here to complete your application.
If you have any questions or queries about your State Pension forecast, or planning for retirement, please call us on 0115 933 8433. We’d love to have a chat and we are always here to help.