State pension and your retirement: everything you need to know

Many people begin to think about their pension only quite late in life. But if you’ve been employed and paid National Insurance (NI) contributions, you already have a state pension. Knowing what to expect from it and how to get the most from it are the first steps towards making sure your retirement is everything you hoped it would be. 

Here at Henderson Loggie Financial Planning, we have a team of experts ready with all the advice you need to help you plan for your life after work. We’ve put together everything you need to know so that you can make informed choices about how you want your retirement to look.

How much is my state pension worth?

The new state pension, in the 2023/24 tax year, is £203.85 per week. The amount you will actually get depends on your National Insurance record when you reach state pension age. The “new” state pension replaced the basic state pension in 2016.

The government has a helpful calculator on its website, or, if you prefer, you can ask them to send you a paper statement.

When do I get my state pension?

There’s now no “official” date by which you have to stop working; you’re quite at liberty to carry on after your state pension age is reached. 

Because we’re all living longer, the government is looking at a recalculation of when the state pension becomes payable; you can look at the proposed timetable here on the gov.uk website, and check the age at which you can access your state pension. 

If you’re a man born before 6 April 1951 or a woman born before 6 April 1953, the basic state pension applies; otherwise, the new state pension is the one you will claim. 

(The basic state pension ­is made of a two-part payment: the basic amount, calculated from your NI contributions, plus an additional amount which is also based on your NI contributions but takes account of your earnings and whether you’ve claimed any benefits.)

How do I get my state pension?

You will get a letter from the Pension Service with a booklet explaining everything you need to know around 4 months before you reach state pensionable age. If you don’t get your information, you can call the Pension Service on 0800 731 7898 (textphone: 0800 731 7339). 

You can claim your pension online, over the phone or by post. You’ll need your NI number and possibly also evidence of your date of birth.

What if I was contracted out?

If you were “contracted out” before 6 April 2016, some national insurance contributions were directed to either a private pension, or were built into a scheme linked to your job. You paid a lower rate of NI and this means you might receive less than the new full state pension.

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How is my state pension calculated?

To receive any new state pension, you usually need 10 qualifying years on your NI record – that is, you have to have paid NI contributions for a minimum of 10 years.

You get a “starting amount”, which can be one of two amounts:

• what you would have received in the pre-2016 system, and includes your basic plus any additional pension
• what you would get if the new state pension had been in operation when you started paid employment.

If you’re starting on an amount that’s more than the full amount of the new state pension, anything above that is protected and paid to you when you begin to claim your state pension. If it’s less, you might be able to increase your pension payments through additional contributions.  

Can I postpone my state pension?

Because you don’t get your state pension automatically, you have to claim it. The government should send you a reminder letter about it a few months before it becomes due. If you don’t claim it, it will defer automatically; if you do defer it, you might be entitled to higher pension payments. 

How much extra you get depends on how long you defer claiming your state pension. It increases by 1% for every 9 weeks you don’t claim it, or about 5.8% for each full year. (If you are claiming certain benefits, this may not apply.) 

Can I make up my National Insurance contributions?

Yes, you can make up any gaps in your NI record, depending on the circumstances. 

Usually, you can pay extra contributions to fill in the gaps only for the past 6 years, but there are exceptions to this rule. The government explains here who can pay, and under what circumstances. 

Can I keep on working if I’m claiming my state pension?

You can continue to work if you’re claiming your state pension. There are a couple of things to bear in mind, though. Firstly, if you’re entitled to any other benefits such as Pension Credit, Housing Benefit and Council Tax Support, your earnings might affect them. 

State pension is taxable, so be aware of how much you’re earning as you might end up in a higher tax band. 

You don’t have to pay NI anymore when you reach state pension age, even if you do keep on working. 

There’s quite a lot of detail here and if some of it seems quite complex, then a chat with one of our friendly advisors will help you to iron out any confusion. 

Our relaxed, professional approach and our many years of helping people plan for their best futures will make sure you come away with a full understanding of where you stand, and what you need to do to ensure that your retirement looks the way you want it to look. Your business is our business – and when you want to move away from the world of work to enjoy a fulfilling and happy retirement, we’re right there with you, every step of the way.