Pension query

ukste

My friend who is male and aged 64 will retire next October when he gets to 65. He will only have state pension as his income. He has £14, 500 in savings. He thinks he will get Pension Credit to top him up to around the £150 a week mark but he's wondering if his savings will stop him getting Pension Credit? Then when he reads it another way he thinks he might get Pension Credit and Savings Credit? So then he thinks he might get a bit more than the £150.

Does anyone know, based on the above, what he will likely be getting. He has full NI contributions.

hugheskevi

He will only have state pension as his income...He has full NI contributions.

This means he will get at least £115 per week, but depending on his earnings and whether he was contracted-out of second-tier pensions he may well get more - potentially over £200 per week.

He thinks he will get Pension Credit to top him up to around the £150 a week mark

He may be eligible, in which case he has to actively apply, it won't be automatic. He is correct that the Guarantee component is about £150.

But he's wondering if his savings will stop him getting Pension Credit

The savings will be treated as if they were £9 per week of income. They will not stop him being eligible for Pension Credit.

Then when he reads it another way he thinks he might get Pension Credit and Savings Credit?

Pension Credit and Savings Credit are the same thing. Pension Credit comes in 2 components, the Guarantee Credit (top-up to £150) and the Saving's Credit. You can get up to about £17 per week of Saving's Credit, if income is between £120 and £190 a week, with the maximum amount of £17 being paid if income (excluding Pension Credit) is around £150 per week.

In this particular case with a full NI record (so at least full Basic State Pension) plus £9 deemed income, he will probably get both Guarantee Credit and Savings Credit, unless his State Pension plus £9 per week is above £150 (in which case he will get Savings Credit only) or above £190 per week, in which case he is not eligible for Pension Credit, subject to any premia he may be entitled to.

He should also be considering eligibility for Housing Benefit and Council Tax benefit.

Note, I've assumed he is single - if he is part of a couple the amounts are all different.

ukste

Thanks very much for your detailed reply, it's really helpful.


A couple of further points that I failed to make in my first post, but that might provide for further clarity:


He had a long period of unemployment, roughly between 1982 and 1996. He signed on during these periods and also took part in some government sponsored training schemes that were about at the time. So he has the appropriate level of NI contributions.


He has never been contracted out into any private pension scheme.


He has been with his current employer since approximately 1996 and his earnings from that job are about £15,000 per year and have never been any more than that in each of the years he's been there.


Your are right to assume that he is single and lives alone. The good thing is that he lives in a house rent free, so he wont be claiming Housing Benefit. But I guess he could start to claim Council Tax benefit based on what you said.


He's just wanting to try and understand what he will get, roughly. He can't seem to make head nor tail of it, but your explanation has really helped.

SeekTruth

Suggest your friend gets a State Pension Statement, see https://www.gov.uk/state-pension-statement

ukste

SeekTruth wrote: »

Suggest your friend gets a State Pension Statement, see https://www.gov.uk/state-pension-statement

Yes, but I note that on the website it says: Contact the Pension Service if you’re within 30 days of reaching State Pension age or you have reached State Pension age and you want a statement.


And of course he's not within 30 days of retiring so probably couldn't do that just yet?

[Deleted User]

Hi,

just hit the Start Now button.

mgdavid

ukste wrote: »

Yes, but I note that on the website it says: Contact the Pension Service if you’re within 30 days of reaching State Pension age or you have reached State Pension age and you want a statement.

And of course he's not within 30 days of retiring so probably couldn't do that just yet?

They mean ring them up if within 30 days of retiring rather than use the online service. Your friend can use the online sevice.

xylophone

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

will be worth a read.

jamesd

Given his work history it's fairly likely that he'll get enough state pension to match the flat rate level. He should phone or use the online service to get his state pension statement. Either works and the people there are friendly and helpful if he chooses to phone. Best time to call is probably as early as possible in the day.

He will have the option of deferring claiming his state pension and it will increase by 10.4% a year, pro-rated for parts of a year, while he is doing that. If the forecast is that his income is going to be above the means tested benefit level this is a pretty good deal for at least a while because it's an inflation-protected increase for life.

ukste

Hi folks. I have some further news regarding his pension and another question or two!


It seems he will get the full State Pension as he has 44 years worth of contributions, so come April if he was claiming pension he would get £115.95 I guess. In addition to that his statement says that he will get another £31.77 which is made of State Second Pension and something which I think they called Graduated pension. So that'll net him £147 and some pence per week if he starts to claim it in November of this year.


1. Given the figure of £147 it likely means that he will not need or be entitled to Pension Credit, will he?


2. But would he be able to get any Savings Credit? He has savings circa £14,500.


3. We know that the Basic State Pension will increase each year, but does the State Second Pension (the £31.77 bit) also increase each year?

xylophone

Read http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

Where you will find full details of Guarantee credit and savings credit and how they are worked out.

April increases see https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382867/proposed_benefit_and_pension_rates_2015_to_2016.pdf