Expert financial advice By Andy Oliver, CEO of Private Client Consultancy
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Understanding the UK State Pension
t recently came to light that there have been 134,000 cases of underpaid state pensions. A public spending watchdog released a report that showed the cases were mostly women, many of whom were widows. The underpayments reached a cumulative total of £1 billion, some of which date all the way back to the mid ‘80s. These underpayments occurred because of a number of factors. First, entitlement rules are complicated, and not everyone understands what they are owed. Second, the Department for Work and Pensions (DWP) uses outdated IT systems, so incorrect information was likely input by computer automations. Additionally, DWP employees did not manually check the calculations on a regular basis. This monumental oversight has the potential to impact pensioners’ housing benefits, pension credit, and social care. For many, it already has. 15,000 pensioners have died without ever having been given what they were entitled to. To make matters worse, their next of kin will not receive payments. Former pensions minister, Steve Webb, first raised the issue in 2020. This
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triggered the DWP to begin an investigation into state pension. Something that many people who became a victim of the mistake, and who are unaware of is that the government offers is entitled to compensation. It is still an active different pension credits that will help boost investigation and is scheduled to be completed your income. by 2023. Unfortunately, those who were Apply for Pension Credit affected will need to file a claim, as they will not If you have a low income and are over the state be automatically recompensed. Additionally, pension age, then you can apply for these they may not receive the full amount they are credits. Pension Credit can help provide you owed. with support for mortgage interest or housing Know what you are entitled to benefits if you live in a rental property, reductions Pensions are one of the most crucial factors in on council tax, and a free TV licence for those 75 having a comfortable retirement, yet the discourse surrounding them is often convoluted. Because many end up losing track of some of antiquated bureaucratic systems and complex rules, many of their pensions throughout their end up losing track of some of their lifetimes and are unsure how to pensions throughout their lifetimes and are unsure how to trace them. trace them. Pensioners are also Pensioners are also often unaware of just how much they are entitled often unaware of just how much to. they are entitled to. Looking into your pensions and finding out how you can receive the money you are owed will greatly benefit your overall retirement plan. In and over. It can also help with any NHS dental addition to receiving the money you are entitled or optical treatments you may require. to, there are ways to increase your income. A Top up your pension financial adviser can help you determine how If you will not or do not have enough years to you can make the most of your money. qualify for the full state pension, you may want Defer your pension to consider topping up your state pension. A For example, it has recently been found top up scheme will allow you to increase your that if you delay your receipt of the weekly income by up to £25 if you pay a Class 3 state pension for 12 months, you National Insurance contribution. will get an extra 5.8% added to Seek professional advice your income for the rest of your It has been made clear now how grave life. (This number may increase administrative errors can occur. Therefore, it is depending on whether the so imperative to not only track down any lost triple lock increases by over pensions you may have, but to also find out 2.5% in the next few years.) what options you have for those pensions. It is possible to defer your Our Wealth Managers can help you do just that. state pension for as long as If you are interested in speaking with a qualified you choose, however, you adviser about your retirement plan, schedule a must defer the full amount. free consultation today. Don’t lose out on the Even if you have already money you are owed. started drawing from your It pays to start planning early. If you would like pension, you may still to discuss your plan with a qualified adviser, defer it in order to earn please get in touch with us at: the extra money. Deferring info@pccwealth.com your state pension may be an especially attractive opportunity if you have a company pension or retirement income from elsewhere. Of course, deferring means that you will need to work longer. This is not an option for everyone, so there are other ways you can increase your
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