State pension amount: How claiming this payment could see you boost state pension income

The state pension can only be claimed by an eligible person once they reach state pension age – something which is currently rising. However, the amount a person gets depends on factors such as their National Insurance record.


  • State pension: How to claim it abroad

Despite a record number of women in employment, women are still less well prepared for retirement than men.

Research shows that the average pension pot for a 65-year-old woman in the UK is £35,800 – which is one fifth of that for the average 65-year-old man.

And, while the gender pay gap is partly responsible for the difference in pension provision, it is not the only factor.

Kay Ingram, chartered financial planner and Public Policy Director at LEBC Group has highlighted that the “motherhood penalty” leaves many people behind in retirement planning, with this gap often beginning when some women take an extended career break to care for children.

Research shows that 27.2 percent of new mothers take an extended career break, compared to 1.5 percent.

To address the motherhood penalty, and to help women build their retirement savings – whether they are working or not – the national financial planning group LEBC has published the “Gender Pension Gap – a Practical Guide” – something which looks at the ways in which women of all ages can improve their retirement prospects, with the second edition of the Guide being available from April 6.

Ms Ingram has shared some top tips on helping mothers to plan for retirement, and this also includes expertise of a simple way some may be able to boost their state pension.

The chartered financial planner said: “Remain in your employer’s pension scheme when on maternity leave. While in receipt of statutory maternity pay, your employer must continue to pay into a pension for you.

“Where the pension is funded on a ‘salary sacrifice’ basis, the employer is obliged to pay the whole cost of the scheme, without deduction from pay, for the entire period of maternity leave.”

Another word of wisdom from the Director of Public Policy included continuing to make pension contributions.

“During an extended break from work, continue to pay into a pension,” suggested Ms Ingram.

“Many workplace pensions are personal or stakeholder plans and these can continue to receive contributions, which qualify for a 20 percent top up from HMRC. “

Should a person not have a pension plan which can receive ongoing payments, it may be that the individual looks into instead opening a personal or stakeholder pension.

“Contributions can start from as little as £20 per month,” Ms Ingram said.

“Non-earners can pay up to £2,880 per year into a pension and non-taxpayers qualify for the top up of up to £720 per year.

“Those returning to work with earnings below £10,000 per year are not automatically enrolled into the employer’s scheme, but they can request to join it.


  • State Pension and coronavirus: How will coronavirus affect my pension?

“Employer contributions and tax relief will double the employee savings.”

Some people may also claim Child Benefit – a payment which parents automatically qualifies for, Ms Ingram said.

“This provides a weekly payment of £20.70 for the first child and £13.70 for subsequent children, but they need to claim it. It can only be backdated three months, so fill in form CH2 on the Government website as soon as possible.”

The chartered financial planner explained an additional perk that comes with Child Benefit – which could see some people boost their state pension.

“This will entitle you to credits for the state pension. Each year’s credit buys £250 of annual State pension and can be claimed until your child is aged 12, which is worth up to £3,000 of annual State Pension in total,” she said.

“It is vital the non-working parent applies, or the credits will be lost.”

Ms Ingram warned about the High Income Child Benefit Tax Charge – which is a charge which now applies to individuals who earn more than £50,000 in the same household that a person claims Child Benefit.

“If another adult in the household earns more than £50,000 child benefit will be taxable on a sliding scale, so that once income exceeds £60,000 it is taxed at 100 percent,” she said.

“If their income is only marginally over the threshold, the tax can be reduced by paying into a pension of their own.

“Alternatively, you may waive payment of Child Benefit. If you waive payment, still complete form CH2 to get the state pension credits.”

Ms Ingram highlighted another suggestion for boosting a state pension amount.

“Much childcare is provided by family members on an informal basis,” she explained.

“They may qualify for state pension credits, if under state pension age and caring for a child under 12.

“Claims for this credit can be backdated to 2011, with every year claimed worth £250 of annual state pension.”

Source: Read Full Article