Neurocafé 18th May 2022 by Linda S
See the slides in LEGS Members' Area for details.
Richard from Hammersmith and Fulham Citizens Advice informed us about pensions, something we should all have an interest in! Pensions are complicated. Detail is important. You may need to get some specialist advice.
A pension is an income for later life when you have stopped paid employment. Richard described the main types of pension (State, Personal, Workplace) how they work, what to think about and where to get more information. What you will receive depends on how it is funded and what age you access it.
Pensions have two phases:
- Accumulation (build it up)
- Decumulation (it pays out)
Visit the government website and set up a gateway ID to check what you will get. Amounts can be subject to change. You need 30 or 35 years of contributions/credits and you can check your contribution record. You can pay voluntary contributions.
Find out estimated pension age & when it will be paid
Depends on number of years of NI contributions/credits
£185.15 a week is the max state pension. £9,627 a year
If you delay taking your pension then you may get more.
The amount increases every April but this can change.
Build up a pot
Government tops it up £20 for every £80
Watch out for level of charges
No tax is taken from 'pot' while it builds up. The size of final 'pot' depends on investment performance, also by amount of money you paid in
You normally have to wait until age 55 to be able to withdraw from your pension.
- Buy annuity
- Get adjustable Income
- Money in chunks
- Money in one go
You can take up to 25% of pot tax free (income tax payable on the rest)
Work place pensions
There are two types of workplace pension:
Defined contribution (DC) which is a money purchase scheme
Defined benefit (DB) based on final salary
This is now less common in the private sector.
There is auto enrolment to force employers to pay into pension schemes. You can opt out but it is 'free money' from your employer!
DC workplace pensions
The main difference is your employer contributes to your pension pot = free money
DB workplace pensions
Mainly now found only in public sector. Limited choice for taking pension
You can transfer DB pension to personal pension - not normally a good idea
There is a spouse or spouse equivalent if you die first, usually 50%.
Can be transferred to a personal pension but not normally a good idea
A means-tested benefit (not a pension) which is similar to Universal Credit.
£182.60 a week single
£278.70 a week couple
Pension Credit tops up income to this minimum level. Ask for help if you need it.
Pension Credit is easy to claim and can be a gateway to other benefits
- Health/welfare, NHS dental care
- Utility bills
Final thoughts and where to find advice
Watch out for scams. For example, do not respond to a 'Free pension review' or 'Help releasing your pension'.
Free and impartial advice is available:
Citizens Advice can help with pensions advice, also offer help with digital skills.
Speak to Future Pension Centre helpline 0800 731 0175
Pension Wise run by 'Money helper' run by the government offer free sessions.
If you have complaints or questions about what has been offered to you, contact the Pensions Ombudsman