Posted on: 18th Jul 2014
It’s a valid question. And one that gets asked a lot. After all we all want to know what pennies will be coming in once we’ve retired so we can work out exactly what we can and can’t afford to do.
So here are a few facts about what to expect when it comes to the state.
The amount you will receive will depend on a number of things. Firstly how many years you’ve qualified to get one.
The average person currently receives just over £110 a week. Which is about £5,800 a year. Of course, that will double if you are married.
However, if you haven’t built up the enough years, you will only be able to claim a smaller amount, which works out at about £67 a week.
Can I boost my pension?
The answer is yes. There’s such a thing as pension credit.
Don’t forget that a state pension is taxable if you are earning elsewhere. It works out in a similar way to that when you are working. The first £10,500 will be free from tax. After that you will have to start paying.
Where it gets more complicated is when you decide on a lump sum pension at a later stage.
To find out exactly then ring the Government information line on 0800 731 7898.
What if I have more money in the pot?
There are plenty of different pension options. And many will have paid into more than one. Most will allow you to take it as a lump sum.
But the amount of pension you’ll get is based on the formula set out in your scheme rules.
This is normally based on your final salary and the number of years you’ve been in the scheme.
It could also be based on a percentage of the salary you got each year you were employed.
And there are many options for your money, including whether to provide for dependants.
One form of pension is called a drawdown and allows you to take income from your pension pot while the pot remains invested. In this instant you can choose how much pension you want to be paid each year within certain limits.
This can actually help you increase your income in later life, but it’s risky and so isn’t suitable for everyone. Best to get direct financial advice from the experts. That’s what we are here for.
So, you might thinkallows you to at last spend your own money as you please. The new flexibility in will certainly help.
But the reality is you will only receive an amount based on what you’ve put in, whether state or not.
Savers and those with good-sized pension funds will feel far better off. But as the pension rules are loosened to allow people to take bigger lump sums, individuals will need to show great restraint in coming years to avoid the rapid depletion of savings earmarked to pay their living costs once they give up work.
To work out exactly what you will be able to take out and when, call us now for some expert advice.