A common misconception is that the start of retirement will automatically fall into place. The reality could not be further from the truth. Here’s a step-by-step guide to claiming your state pension entitlement.
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For many, the state pension is the main source of retirement income. So it’s imperative to make sure everything is in order for you to get paid accordingly on the date you reach the required age.
Step-by-step guide to claim your state pension entitlement:
1. Identify your state pension entitlement at an earlier date.
Preferably, this should be done at least two years prior to your state retirement date.
2. Claim your state retirement.
Do this three to four months before your designated state retirement age.
You must confirm you actually want to receive it (and not to defer it). You will then receive a statement confirming the date of the first payment and quantifying the actual amount of pension you will receive.
3. Contest the pension figure in four weeks.
This is in case you do not understand or agree with it.
If you follow the first step in this guide, you will avoid the pressure of trying to put forward an evidenced claim for pension recalculation in the 4-week window leading up to your retirement date.
4. Obtain a state pension forecast.
You can do this by visiting www.gov.uk. The online process requires you to register for a Government Gateway user ID and having certain information to hand such as your national insurance number.
If you can’t go online, a form called BR 19 can be obtained from the post office.
The forecast gives you the headline figure of your expected level of old age pension (usually on the proviso of continued contributions). It also gives a comprehensive record of your national insurance contributions for each year of your working life and as to whether they were complete or incomplete for each year.
This data will help you ascertain if the proposed pension figure is correct.
If it isn’t, you should be able to use the national insurance contributions record to identify where the error may have occurred.
If it is correct and you wish to increase the accrued figure towards the maximum pension, you have the remaining time to consider the viability of making additional contributions under the class 3 schedule to help make up the difference.
5. Research old pension pots.
If you are employed, you will probably be auto enrolled into the workplace pension by your employer, and the process of identifying your current pension funds value and its options for retirement will be comparatively straightforward.
Chances are, over the last 35 or 40 years, you may well have contributed to a few retirement schemes.
Given the time they may have spent in investment, even comparatively small sums can grow and are well worth identifying.
Researching old pension pots can be perceived to be difficult and put on the back burner – this kind of procrastination has resulted in quite literally millions of pounds lying unclaimed in what are known as ‘orphan funds’; these funds will not automatically find you.
Obviously, any paperwork from past employers will enable them to identify what pension rights you may have had.
However, what happens if that business no longer exists? Again, all is not lost as companies might change through merger and acquisition, but your pension scheme remains untouched by these changes and through another government-based instrument – the pension tracing service – the correct contact for your inquiry can be confirmed.
Word of warning: to access the pension tracing service, you just need to search online. But be aware that within the list that appears, there will be private companies listed that will appear mirroring the same service but charging to do so. The actual pensions tracing service is free of charge and may well appear further down the page.
6. Confirm the type of retirement you’re considering with your employer.
Remember there is no longer a statutory retirement date so the fact that you are approaching 66 or 67 years of age does not mean that your employer has any expectation of you ceasing work.
Now whilst many people are pleased to finish work, others feel too young or don’t have sufficient interest in retirement to stop work entirely. Starting this conversation with your employer is recommended.
7. Engage with an independent financial advisor.
This will help you to confirm the best way forward.
Learn more about Acumen Financial Planning.
Find out how to stay on top of your pensions paperwork.