According to figures from the Department for Work and Pensions (DWP), around 12.7 million retirees in England and more than 1 million in Scotland are currently receiving a state pension. The pension is available to people who have reached UK government retirement age (currently 66 for both men and women) and have paid National Insurance contributions for at least 10 years.
What you need to know about the pension system
What is surprising about this news is that many people nearing retirement may not know that the DWP will not automatically pay this benefit, worth up to £221.20 a week. Instead, you need to claim it. Additionally, many people may not know that they can receive their paycheck every week, every two weeks, or every four weeks.
One member of the Facebook group ‘Daily Record Money Saving Scotland’ said these different payment options were only available if you made a state pension claim over the phone. If done online, by default he will be paid every 4 weeks. So, if you want to receive payments more frequently, calling may be the best way to go.
Pension claim
When it’s time to claim your pension, you should receive a letter at least two months before you reach state pension age. This letter will give you instructions on what you need to do, including how to claim and defer your pension.
Payment will be based on the last two digits of your National Insurance number.
- 00～19 – Paid on Monday
- 20～39 – Paid on Tuesday
- 40～59 – Paid on Wednesday
- 60～79 – Paid on Thursday
- 80～99 – Paid on Friday
No additional procedures are required for pension deferral. If unclaimed, your pension will be automatically deferred.
If you have an eligible year on your National Insurance record as of 5 April 2016, the Department for Work and Pensions (DWP) will calculate your new state pension ‘starting amount’.
Your “starting amount” is less than your new full state pension amount. For every ‘eligible year’ you add to your National Insurance record after 5 April 2016, you will pay a small extra fee of approximately £6.32 (£221.20 divided by 35) per week. This will continue to be added until you reach your new full state pension or reach your state pension age, whichever comes first.
Your ‘starting amount’ is more than the full amount of your new state pension. In this case, you will receive a higher amount when you reach the national pension age. This can happen if you receive an additional state pension. The difference between the “starting amount” and the full amount of the new national pension you receive is called the “protected benefit amount.”
Your ‘starting amount’ is exactly the same as your new state pension’s full amount. When you reach the national pension age, you will receive the full amount of your national pension.
Consider deferring payments
If you put off claiming your state pension, your weekly payments could be higher when you finally start collecting it. You must defer for at least 9 weeks to earn this additional cash. For every nine weeks of grace, your national pension will increase by approximately 1%. Delaying the full 52 weeks would result in an increase of nearly 5.8%.
The additional amount will be added to your regular state pension payment. However, the extra money you earn from deferrals may be taxable, so check GOV.UK for more information.
Another thing to note: the deferred state pension is also increased annually based on the Consumer Price Index (CPI) inflation rate and the highest standard of the triple lock policy from September. So it’s worth paying attention to that as well.
Don’t miss out on this pension opportunity. Look out for a letter confirming your eligibility and providing instructions on what to do next.Enjoy your national pension
