The Financial Times in an article on the 7th of September wrote that the Treasury was preparing to increase the UK state pension by more than 8% in 2024/2025.
This is on top of a 10.1% rise this year.
This would mean that as of next year, the state pension could be £11,448 per year, or £22,896 for a couple. This is enough to take care of essential spending such as utilities, council tax and basic food.
For a couple who are entitled to the full benefit, the state pension is equivalent to an annuity worth 450K pounds.
So here’s what you need to know –
- The state pension is based on your National Insurance Record and you need at least 10 years to qualify.
- You can check to see how much State Pension you’ve built up so far on this website https://www.gov.uk/check-state-pension
- To get the full amount you need to have 35 years of contributions
- If you are worried that you have missed years you can top these up with Class 3 NI contributions. These are voluntary and allow people to fill gaps in their records.
- If you were born after 6th April 1978- the state pension age is 68, from 1970-1978 it is between 67 and 68 depending on when you were born and before 1970 it is 67.
- The above ages could change (i.e. move up) and most probably will over time.
- In theory, the state pension should go up by the triple lock (so the higher of inflation, earnings or 2.5%). The government has abided by this except for the year 2022-2023.
If you are planning to retire early, it’s certainly worth topping up contributions or even continuing to work part time. And stay at home mothers who were not claiming child benefit are now importantly able to add these years to their pension.
The state pension has now become a key backstop to all our financial plans. Don’t overlook it!
- This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.