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supporting welfare to work providers

Pensions

Finance section image - depicting small plastic businessman staring at a large pound sign shadow on the ground

You may find this information useful when talking to your 50+ customers about pension issues.

All relevant eligibility criteria for state pension provision can be found at Gov.UK

When will they be eligible to receive the state pension?  Currently, the State Pension age for men is 65. On 6 April 2010, the State Pension age for women started to increase gradually from 60 to 65, to match men's.  You can find out when your customers will be able to get their state pensions under the current law by using the State Pension Age Calculator. 

The Government has decided that the State Pension Age should increase from 65 to 66 between December 2018 and April 2020 for both men and women.  (The Pensions Act 2007 legislated for the State Pension age to rise for both men and women to 66 by 2026). Women's State Pension Age is currently rising from 60 to be equalised with men's at 65 by April 2020.  To enable an earlier increase to 66, the equalisation timetable will be adjusted from April 2016 so that women's State Pension Age will reach 65  by November 2018.   Women born before 6 April 1953 and men born before 6 December 1953 will not be affected by these new proposals.  Legislation to change the timetable will be introduced early in 2011. 

Are they eligible for state pension?

Which elements of the state pension will they be entitled to receive?

1. Basic

  • Not everyone is entitled to a full basic state pension. Complex rules regarding national insurance contributions paid or credited over relevant ‘qualifying years’ determines the percentage of basic state pension received

2. Additional state pensions (graduated/SERPS/SP2 second state pension)

  • Are not available to those who have been self-employed
  • This element of pension is variable, is earnings related but can add significantly to monies received

They can check how much will be due by obtaining a state pension forecast.
This gives a comprehensive breakdown of all the monies that will be paid (weekly) in today’s currency.

There are a number of groups of carers who may be entitled to Carer's Credit, an important protection for their State Pension. (For example, iIf they care and work but do not earn enough to pay National Insurance contributions for the whole year.)

Pension forecasts from occupational or private pensions

They can obtain pension forecasts from all occupational or private pensions that they may have paid into over their entire working life.

  • When will these start to pay out?
  • Will they be able to take any lump sum? Up to 25 per cent can be taken tax free from age 55 dependent on the type of scheme and the scheme rules
  • If they have lost details of these contact pension tracing service - trace a personal or company pension scheme

They can create a simple budget planner (in today’s monies) to identify their likely situation at retirement.

Budget planner

Does the picture suggest a surplus or a shortfall? If a shortfall what can be done to help?

Consider all potential sources of income

  • Pensions. Work. Savings. Property. Lodgers. Dependants. Inheritances. Hobbies e.g. EBay. Benefits. Other assets that can be sold. Concessions

Identify likely outgoings

  • What costs might decrease?
    • mortgage paid off. Transport. Clothing. No national insurance or pension contributions. Reduced tax as personal allowances increase at 65 so people on low income may not pay tax
  • What costs might increase?
    • care costs. Utilities as home more. Leisure

Helping with shortfall: (see section on Benefits)
For adults on the lowest pension the primary source of help is the guarantee element of pension credit. This guarantees a minimum weekly income

  • Other ways to deal with shortfall
    • saving
    • paying voluntary national insurance contributions to boost state provision
    • downsizing to a cheaper property
    • taking equity out of existing property
    • finding work
    • becoming self-employed. Making money from hobbies
    • identifying all potential welfare benefits
    • reducing expenditure
    • debt management
    • selling assets

How much is the full basic state pension worth?

The current rates for a full basic state pension are (year to April 2011):

  • Single person: £97.65 per week £5,077.80 per annum
  • Couple: £156.15 per week £8,119.80 per annum.

Disclaimer
This site is for help and information only. It is not meant as an authoritative guide. It is not meant as an authoritative statement of the law, and future changes in the law and other programmes and initiatives could make it less accurate at times. TAEN, the Department for Work and Pensions and the European Social Fund take no responsibility for your use of the information. You should always take professional advice on any specific legal or financial matter.