16 Oct Apprentice Jonathan 3 Months On
The time has flown by and I have been at Pentins for almost 3 months now. I am enjoying the routine and structure of the 9 to 5 day and have been busy doing a variety of tasks and getting familiar with how things work around here. One of the highlights of the last month was an opportunity to play a Charity Event at Boughton Golf club.
I’m now well underway with my regulated financial planning studies so I am learning a lot about the polices and practices within the financial services industries. One of the areas that are covered in this is pensions. My parents are both at the age (55+) when there is a lot of serious talk at home around retirement planning and how much money they will need to fund the lifestyle that they want.
So I have decided to focus this month’s blog on one of the topics I hear them discuss and also one that I know Pentins can provide their clients advice and guidance on as part of a wider discussion of retirement planning. Like many other couples, my parents have between them – as a result of the different careers and jobs over the years – a combination of final salary occupational pension schemes and private pension schemes. As they have both been working now for more than 35 years they have built up sufficient contributions to receive a full new State Pension – or so they thought!
The State Pension has undergone some controversial changes in recent years with the introduction of a new flat rate pension and a change of age at which everyone will receive their state pension – this has increased for men and women to at least 66 on a sliding scale upwards depending on when you were born. As a result of these changes, my parents will have to wait quite a bit longer before they reach the State Pension Age and can get their hands on this money, so were keen to know exactly where they stood in terms of their state pension entitlement. Therefore, one of the early tasks which they were both advised to do – and Pentins would certainly advocate this as well – was to obtain a current forecast of their State Pension benefit via the government’s on-line portal.
If you haven’t done this already then here are some useful state pension tips:
Go online at www.gov.uk/new-state-pension or contact Department for Work and Pensions (DWP) to request an up-to-date State Pension forecast. DWP will use your NI record under old and new State Pension rules to calculate your State Pension Entitlement
Your “starting amount” can be less than, more than or equal to the new full State pension of just over £8750 a year (£168.60 a week)
Consider paying voluntary NI contributions if there are gaps in your records (you can go back six years) - Pentins FP can advice on this
There is no benefit paying voluntary NI contributions if you've built up 30 years under the old system before April 2016.
Ensure you’ve claimed credits for periods when you’ve not worked, for example, when unemployed or looking after children. This should happen automatically, but mistakes can happen and do happen, especially if you are self-employed
You can also claim NI credits if you are caring for parents or grandchildren
If you’ve been contracted out of the additional state pension for any period before April 2016 (and both my parents were so this isn't unusual), you will have either paid lower NI or have had NI rebates paid into a personal pension plan and therefore receive a smaller State Pension than the full amount even after 35 years of contributions. Your private pension is intended to replace the state pension given up but, depending on the type of pension this may not resemble the actual amount given up.
Consider deferring your State Pension after your nominated State Pension Age - although this is less financially generous than previously so seek independent financial advice on this.
I am preparing to go off on a week’s annual leave now and when I return, the country will be making a decision about Brexit on 31 October. Will we leave the EU? Deal or No Deal? Will there be a general election? Whatever the outcome, Pentins will be here to help our clients assess the impact for them and assist them with making the financial decisions to suit their needs for now and for the future.