A woman using a laptop and writing notes.

3 practical reasons to check your State Pension forecast before you retire

A woman using a laptop and writing notes.The State Pension is often a useful foundation when you’re creating an income in retirement. Yet, a survey from Just Group found that a third of people didn’t check their State Pension forecast before stopping work.

While the State Pension might not be your primary income in retirement, it’s often valuable because it’s reliable – you’ll receive a regular income when you reach State Pension Age for the rest of your life. In addition, under the triple lock, the State Pension also increases each tax year, which could help maintain your spending power throughout retirement.

So, if you’ve been neglecting your State Pension, it might be worth giving it some attention. Here are three practical reasons to check your State Pension before you retire.

1. The State Pension Age is rising and could be later than you expect

The State Pension Age is the earliest date you can claim your State Pension, and it depends on when you were born.

Currently, the State Pension Age is 66 for both men and women. However, it is slowly rising. For those born after 5 April 1960, there will be a phased increase in State Pension Age to 68. So, the date you can claim the State Pension might be later than you expect.

While further increases haven’t been announced by the government, there are expectations that the State Pension Age will rise again in the future as life expectancy increases. Indeed, the International Longevity Centre calculates the State Pension Age will need to rise to 71 by 2050 to maintain the current ratio of workers to retirees.

Checking your State Pension forecast before you plan to retire could help you avoid a potential financial shock if you can’t claim it when you expect.

2. You might want to fill in National Insurance gaps to increase your State Pension

In 2024/25, the full new State Pension is £221.20 a week – more than £11,500 a year. However, to receive the full amount, you will normally need to have made at least 35 qualifying years of National Insurance (NI) contributions. If you have fewer qualifying years, you’ll often receive a portion of the full amount.

If you’re not entitled to the full new State Pension due to gaps in your NI record, you may be able to buy additional years. In some cases, this could boost your income during retirement.

Typically, a full NI year costs £824 and could add up to £302.64 each year to your pre-tax State Pension income. So, you may not need to claim the State Pension for long before you benefit financially.

Before you fill in the gaps, you may want to consider your retirement plans. If you’re still several years away from retirement, you might reach the 35 qualifying years you need without making voluntary contributions.

You can usually only fill in the gaps in your NI record for the last six tax years. However, if you are a man born after 5 April 1951 or a woman born after 5 April 1953, you may be able to make voluntary contributions to make up for gaps between tax years April 2006 and April 2016 if you do this before 5 April 2025.  After 5 April 2025, you’ll only be able to pay for voluntary contributions for the past 6 years.  So, checking your State Pension forecast and looking at any gaps now could identify a way to boost your income in retirement.

If you want to make voluntary NI contributions, you’ll need to contact HMRC to get a reference and find out exactly how much filling in the gaps could cost you.

3. Your State Pension could affect your wider retirement plan

Understanding how much you’ll receive from the State Pension and when you can claim it might play an important role in your wider financial plan.

While the money you receive from the State Pension might not be your main source of income in retirement, it could provide a useful foundation to build on. By factoring it in, you might find that you’re on track for a more comfortable retirement than you expected, or that you could afford to withdraw a lump sum from your pension at the start of retirement to tick off bucket list items.

Checking your State Pension forecast could mean you’re in a better position to make retirement decisions, including how you’ll use other assets to support your lifestyle goals.

You can check your State Pension forecast quickly online

Checking your State Pension forecast is often simple. You can use the government tool here or the HMRC app. You can also contact the Future Pension Centre if you’d prefer to receive the information by post, so long as your State Pension Age is more than 30 days away.

Get in touch to talk about your retirement income

The State Pension is often just part of the income you’ll receive in retirement. We could help you create a retirement plan that brings together the different sources of income you might have, including workplace pensions, annuities, investments, property, and more.

Please contact us to talk about your retirement plans and the support we could provide as you prepare for the next chapter of your life.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

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4 compelling reasons you might want to consolidate your pension

A woman reviewing some paperwork at home.

It’s been more than a decade since auto-enrolment was introduced, and now most workers automatically become members of their employer’s pension scheme. While more people saving for retirement is excellent news, it could mean you end up juggling multiple pots.

One option is to transfer one pension to another, known as “consolidation”. It’s usually simple to do and there are many reasons why you might want to transfer a pension. However, there are also some potential drawbacks that you may wish to weigh up first.

Here are four compelling reasons you might want to transfer one pension to another.

1. It could make it easier to keep track of your savings during your working life

With each job potentially providing you with a pension, the number of pots you might need to manage could become overwhelming during your working life. Indeed, according to Zippia, the average person has 12 different jobs in their lifetime.

Keeping track of several pensions can be difficult. Not only could it make calculating if you’re on track for retirement challenging, but it may be easier to “lose” some of your savings too. According to Aviva, there could be as many as 2.8 million lost pensions in the UK, with a combined value of £26.6 billion.

Consolidating your pension could make handling your retirement plans easier during your working life.

2. Fewer pensions could make creating a retirement income simpler

Similarly, managing multiple pensions in retirement could also be complicated. If you’re juggling several pots, you might need to consider how to spread withdrawals across them and regularly review how the value of each one has changed to ensure withdrawals are sustainable.

Transferring your pensions could make the decisions you make once you retire simpler and your finances easier to manage throughout the next stage of your life.

3. Pension consolidation could reduce the fees you pay overall

Usually, you’ll pay a fee to your pension provider for running your pension scheme and investing on your behalf. This may be a set amount or a percentage of your total pension pot.

Fees vary between providers, so it may be worth reviewing how much you’re paying each pension scheme and considering if transferring could reduce the overall cost. Lower fees mean more of your contributions will be invested for your retirement, which could help your savings grow at a faster pace.

4. You could transfer your retirement savings to a scheme that is performing well

Typically, your pension is invested with the aim of delivering long-term growth. So, transferring your money to a scheme that has investment options that suit your needs or perform well could deliver a boost to the value of your pension over the long term.

When you’re reviewing the performance of your pension, remember to focus on the long term. Short-term market movements may affect the value of your pension, but over a longer time frame markets have, historically, delivered returns.

Essential reasons you might choose not to transfer your pension

While there might be a good case for transferring your pension, there are reasons not to do so too. Here are three reasons you may decide to leave your retirement savings with your current pension scheme.

1. You have a defined benefit (DB) pension

A DB pension, also known as a “final salary pension”, would provide you with a guaranteed income from your retirement date for the rest of your life to create long-term security. They are often generous, and it usually doesn’t make financial sense to transfer out of a DB pension.

You will normally need to receive specialist financial advice to transfer out of a DB pension to ensure you understand the benefits you’d be losing.

Transferring out of a DB scheme is unlikely to be in the best interests of or be suitable for most people.

2.  Your pension provides additional benefits

When you transfer out of a pension, you’d lose any additional benefits that come with it. So, it might be worth reviewing what your pension offers and whether these benefits could be valuable to you.

For example, your pension could allow you to access your savings earlier, which might be useful if you want to retire sooner, or provide a guaranteed annuity rate when you start to take an income from it.

3. Withdrawing from small pension pots could be useful

Having several smaller pension pots might be useful if you want to access some of your savings and continue to contribute. “Small pots” are usually defined as a pension with a value of less than £10,000.

In some cases, you might be able to withdraw money from a small pot without triggering the Money Purchase Annual Allowance, which would reduce the amount you can tax-efficiently contribute to a pension in 2024/25 to just £10,000, compared to the usual £60,000.

Considering your retirement plans and reviewing each pension before you decide to transfer it to another scheme could help you decide if consolidation is right for you.

You should also note that transferring your pension may come with a fee. Make sure you understand the potential cost before you proceed.

Contact us to arrange a meeting to discuss your pension and retirement

If you’re thinking about consolidating your pensions and would like to understand if it’s the right decision for you, please get in touch. We can provide tailored advice about your retirement plan and how you could turn goals into a reality.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

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