Pensions Checklist

The Pensions Checklist – make sure you’re getting what you are entitled to!

Pension credit

This comes in two parts – guarantee and savings. The former tops up income to a minimum of £198.45 a week for a couple or £130 a week for a single pensioner, if their income is below that level. The latter is aimed at helping those who have made some private pension provision, explained an independent expert. “However, it doesn’t mean that every £1 saved makes the pensioner £1 better off since there is a maximum income threshold of £266 a week for a couple or £181 per week for a single pensioner before the credit is lost,” he said.

To qualify for pension credit, council tax and housing benefit claimants must have savings of no more than £10,000, which rose last week from £6,000.

Income earned on savings is not taken into account until that limit is reached, after which you are assumed to get income of £1 a week. Another £1 a week is added for every £500 above the threshold.

Other benefits

Anyone getting the guaranteed pension credit is entitled to council tax benefit covering the whole payment, but it is estimated that two-fifths of pensioners entitled to council tax rebates fail to claim them. Those not getting the guaranteed pension credit do not get the full council tax benefit but may qualify for some discount, depending on their savings and income.

Pensioners on low incomes can also claim for assistance such as winter fuel and cold weather payments, a free television licence (to which all over-75s are entitled), the Christmas bonus, insulation grants, the central heating scheme and personal tax allowances.

For more information on benefits, contact your local council or your local Citizens Advice bureau. Also visit www.entitled. com to check you are getting everything you are eligible for.

State pension deferral

If you are retired but not already taking your pension you can defer drawing it. You can boost your weekly pension payment by 1 per cent for every five weeks that you defer, or get a lump sum plus interest of the base rate plus 2 per cent if you delay taking it for at least a year.

However the gains can be slim, depending how long you delay for, and it is generally inadvisable unless you continue to work past retirement or have a sufficient savings buffer.

You can get a forecast of your current state pension entitlement and the likely figure at retirement from the Pension Service (0845 300 0168 or www.thepensionservice.gov.uk).

Women and pensions

Only one in three women retires on a full state pension, compared with 90 per cent of men. Women currently need 39 years of national insurance contributions to qualify for the full basic state pension, but that falls to 30 years in April.

Those with fewer than than 25 per cent qualifying years (less than 7.5 years as of April) have no basic state pension entitlement, while those with contributions between 7.5 and 30 years are entitled to some level of basic state pension.

Those with an incomplete record can buy back years of contributions to boost their pension. To find out more, call the Pensions Advisory Service’s helpline for women (0845 600 0806) or visit www.pensions advisoryservice.org.uk.

One pensions specialist said, “If you have the ability to make up a shortfall in your basic state pension, do it.

“Depending solely on the state pension will result in an austere retirement, but I still believe they offer incredible value for money.”

Get the best annuity

Shopping around for the highest annuity rate using the open market option can significantly bolster the income you get from your pension, with a difference of at least 20 per cent between the best and worst on the market. Smokers and those with health conditions may qualify for an enhanced annuity paying out a higher rate.