Almost 12.7 million retirees in the UK and over a million in Scotland are currently receiving State pensions, according to statistics from the Department for Work and Pensions (DWP). This pension is for people who have hit the UK Government’s retirement age, which is now 66 for both men and women and have paid National Insurance Contributions for at least 10 years.
What to know about the pension system
What is surprising about this news is that many people who are nearing retirement might not know that the DWP doesn’t automatically pay this benefit—worth up to £221.20 a week. Instead, you have to claim it. Plus, many might not realize that they can choose to get paid weekly, every two weeks, or every four weeks.
One member of the Daily Record Money Saving Scotland Facebook group mentioned that you get these different payment options only if you make your State Pension claim over the phone. If you do it online, it’ll default to payments every four weeks. So, if you want to get paid more frequently, then making a phone call might be the way to go.
Claiming or your pension
When it comes time to claim your pension, ou should get a letter no later than two months before you reach State Pension age. The letter will have instructions on what you need to do, including how to claim or defer your pension.
Payments are distributed based on the last two digits of your National Insurance number.
- 00 to 19 – paid on a Monday
- 20 to 39 – paid on a Tuesday
- 40 to 59 – paid on a Wednesday
- 60 to 79 – paid on a Thursday
- 80 to 99 – paid on a Friday
When it comes to deferring your pension, you don’t have to take any additional action. If it’s unclaimed, the pension will automatically be deferred.
If you have qualifying years on your National Insurance record as of April 5, 2016, the Department for Work and Pensions (DWP) will calculate your “starting amount” for the new State Pension.
Your “starting amount” is less than the full new State Pension: For every “qualifying year” you add to your National Insurance record after April 5, 2016, you’ll get a little extra, around £6.32 a week (which is £221.20 divided by 35). This keeps adding up until you either reach the full new State Pension or hit State Pension age, whichever comes first.
Your “starting amount” is more than the full new State Pension: If this is the case, you’ll get that higher amount when you reach State Pension age. This could happen if you have some Additional State Pension. The gap between your “starting amount” and the full new State Pension is called your “protected payment.”
Your “starting amount” is exactly the same as the full new State Pension: Then you’ll get the full new State Pension when you reach State Pension age.
Consider deferring your payments
If you hold off on claiming your State Pension, you could get bigger weekly payments when you finally start collecting. To get this extra cash, you need to defer for at least nine weeks. For every nine weeks you defer, your State Pension goes up by about 1%. If you defer for a full 52 weeks, that’s an increase of nearly 5.8%.
The extra money will be added to your regular State Pension payments. However, any additional money you earn from deferring might be taxed, so check out GOV.UK for more info.
One more thing to note: Deferred State Pensions also go up each year based on the Consumer Price Index (CPI) inflation rate from September and the highest measure of the Triple Lock policy. So, it’s worth keeping an eye on that too.
Don’t miss out on this pension opportunity. Remember to check your qualifications and look out for your letter that will give you instructions on what to do next. Enjoy your state pension