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Retirees will benefit from a State Pension boost

The State Pension is set to rise in April 2022. 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 normally increases in line with the triple lock. This means it rises by the greater of wage growth, inflation (CPI), or 2.5% each year.

On Tuesday 7 September 2021, the government confirmed plans to suspend this rule for one year.

Why was the triple lock rule suspended?

Average wage growth has been abnormally high this year. In fact, in the three months to July 2021, which would have been the figure used for the triple lock, it was a whopping 8.3%. This is largely due to the impact of the pandemic on wages in the previous year.

The government felt such an increase to the State Pension would have been disproportionate. It would’ve been the largest increase since the triple lock was introduced in 2011.

How much can 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.

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. You can also use the government’s State Pension calculator to find out the earliest age you can claim payments.

How much will the State Pension pay from April 2022?

Inflation (CPI) rose 3.1% in the 12 months to September 2021, meaning State Pension income will rise by this amount from April 2022. The government also intends to revert to the use of the ‘triple lock’ in the future.

The full new State Pension will rise from £179.60 to £185.15 per week. That means you’d get an extra £288.60 next year.

For anyone entitled to the full basic State Pension, it’s set to increase from £137.60 to £141.85 per week – a total of £221 extra next year.

How to increase your State Pension Income

Delay claiming your State Pension

If you’re planning to work past State Pension age, you could think about delaying your State Pension payments.

If you do, the government will increase the amount you receive every year you delay taking an income.

More on delaying the State Pension

Make voluntary National Insurance contributions

You could consider filling any gaps in your National Insurance record, if eligible. You need a minimum of 35 years of National Insurance (NI) contributions to be eligible for the full new State Pension income. By choosing to make voluntary NI contributions, this could increase the amount of income you receive.

Pension credits

For anyone over State Pension age, and whose earnings are less than £177.10 (£270.30 for a couple) a week (2021/22), 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?

Many believe the State Pension will be enough to live off alone. When the likelihood is, for most people, it won’t be.

Currently if you receive the full new State Pension, you’d get £9,339.20 a year. That means you’d fall short by around £24,000, if you wanted to reach a comfortable living standard suggested by industry experts. And as shown by the pause to the triple lock, the government can change the rules at any time. This highlights the importance of saving into a workplace or private pension, alongside anything the state offers.

Realistically your retirement could last 30 years or even longer, so you need to make sure you’ll have enough money to last as long as your retirement. Our pension calculator can help you to work out how much your current pensions are on track to pay you in retirement. And if you’re not on track, we offer some tips to help you reach your income goals.

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?

What you do with your pension is an important decision. We strongly recommend you understand your options and check the option you pick 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.

What did you think of this article?

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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