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Retirees will benefit from a state pension boost

The state pension is set to rise in April 2020. We reveal how much more you could get, plus how you might benefit from delaying taking it.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The state pension currently increases in line with the triple lock. This means it rises by the greater of wage growth, inflation (CPI), or 2.5 per cent.

But which one’s coming out on top?

CPI for September has been announced at 1.7%. And earnings growth in the past three months was 3.9%.

Luckily for retirees this means you’ll get the highest increase to the state pension in eight years.

How much state pension could I currently get and when?

The state pension isn’t the same for everyone, and understanding how much you could claim, and when, can be confusing. Not only are the rules complex, but they’re changing.

The amount you’ll get depends on whether you qualify for the basic state pension or new state pension and how many ‘qualifying years’ of National Insurance (NI) contributions you have. It will also depend on whether or not you contracted out of the additional state pension.

To check how much you’re on track to receive, ask for a state pension statement.

Women used to be able to claim the state pension at age 60, and men 65, but this age has become equalised. You can use the Government’s calculator to find out the earliest age you can claim payments.

More on the state pension

How much will the state pension pay from April 2020?

The new state pension will rise from £168.60 to a maximum of £175.20 per week. That means you’d get an extra £343.20 next year.

For anyone entitled to the full basic state pension, it’s set to increase from £129.20 to £134.25 per week – a total of £262.60 extra over the next year.

This is the highest percentage increase to the state pension since 2012:

Year State pension increase
April 2012/13 5.2%
April 2013/14 2.5%
April 2014/15 2.7%
April 2015/16 2.5%
April 2016/17 2.9%
April 2017/18 2.5%
April 2018/19 3.0%
April 2019/20 2.6%
April 2020/21 3.9%*

*These figures are subject to legislation and aren’t yet confirmed.

Delaying the state pension

Nowadays more and more people are choosing to work past state pension age. In fact, there are over 1.3 million people in the UK aged 65 or over still in work. If you’re planning to do the same, you could think about delaying your state pension payments.

If you do, the government will increase the amount you receive. Let’s say you’re eligible to claim the full new state pension from May 2020 and you’re due to receive £175.20 a week. If you chose to wait 36 weeks to claim your state pension, your weekly payments would increase to £182.20 per week in today’s money.

More on delaying the state pension

Pension credits

For anyone over state pension age, and whose earnings are less than £167.25 a week (2019/20), you could be eligible for pension credit. This is an income-related benefit, on which you won’t have to pay tax. The amount of pension credit you’ll get depends on your personal circumstances.

To find out if you’re eligible, and by how much, you can use the government’s calculator.

Can you live off the state pension alone?

For most people the state pension won’t be enough on its own.

The Pension and Lifetime Savings Association (PLSA) have launched a new Retirement Living Standards designed to help people imagine the lifestyle they want when they retire.

The minimum they suggest for an individual to live in retirement is £10,200 a year. Currently the maximum you could receive from the state pension is £8,767.20 a year, meaning you’d fall short by £1,432.80. That’s without even factoring in the cost of running a car or taking a holiday abroad.

Our planning tools can help you work out how much more you might need your private pension to pay and how you can make up for any differences.

Budget planner

Pension calculator

What other help is available?

If you would like to know more about your retirement options, you can call our helpdesk on 0117 980 9926. They’re available six days a week: Monday-Thursday 8am-7pm, Friday 8am-6pm and Saturday 9:30am-12:30pm.

What you do with your pension is an important decision. We strongly recommend you understand your options and check your chosen option is right for your circumstances. Take advice or seek guidance if you’re unsure.

The government provides a free and impartial service to help you understand your retirement options - more on Pension Wise.

This article isn’t personal advice. We offer a range of information and support to help you plan your own finances. We also have an advisory service that can help you achieve your goals.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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