Claiming your pension might sound like a big job, but it’s straightforward. Here are a few things you’ll need to know:
Your age determines when you’ll get access to your pension. The type of pension is another determining factor. You can access your workplace pensions1 as well as your pensions when you’re in your mid-late 50s. However, you’ll only gain access to your State Pension when you’re in your mid-late 60s. You can also carry on with work when you start cashing in your pension, or you can delay withdrawing your retirement by a few years. It’s up to you.
State Pension Explained
The State Pension regularly pays out. The money you get comes from the government when you reach the eligible age of 66 and 67 (from the year 2028).
A new State Pension system was set in place since the 6th of April, 2016. What does this mean for you? Well, the amount of money you’ll receive depends on your age (whether you’ve reached you State Pension yet or not). Paying National Insurance Contributions will qualify you for the new State Pension if you’ve been doing so for at least 10 years. If you’ve paid National Insurance Contributions for 35 years, you’ll receive £9,110.40 annually.
On gov.uk is a tool that lets you check your State Pension age, as well as your National Insurance Contribution record if you want to make sure you have adequate years to qualify. The UK doesn’t stipulate a default retirement age anymore. However, you don’t have to withdraw your pension at the State Pension age. You have the option to defer it since there isn’t a default pension age in the UK.
Workplace Pension Explained
Defined contribution pensions, workplace pensions and personal pensions all work similarly. These are pensions that have either been personally set up your employer might have set it up for you. They all involve you paying in regular contributions throughout your employment. The pensions’ value determined by how much you’ve paid into them and how well/poorly your investments have increased or decreased.
You can withdraw from this pension pot when you’re 55. The age might change to 57 by the year 2028. There are so many pension plans for accessing the funds that are in your workplace pension. You can withdraw funds as a lump sum from your retirement or use that money to invest via drawdown. Purchasing an annuity is also an option you can consider. Some people keep their retirement as is. Few people retire at the young age of 55. Some can live without a stable salary for a few years.
A defined benefit workplace pension plan has different requirements. Why? Because your pension’s value is determined by the period you worked for, as well as your salary. At 55 you can withdraw up to 25% of either tax-free. However, some plans require you to be a specific age to access the rest of your pension. This age should be pre-agreed with your pension provider.
What is Early Retirement?
You can end your career life at any stage. In the UK, there are no laws to prevent you from doing that. Your retirement date is also your own choice. However, before you retire, you’ll need to make sure that you’ll have sufficient funds to support your when you stop working and enter into retirement. It doesn’t matter when you choose to retire. You’ll still need to be 55 years old to withdraw from your workplace or personal pensions. The same goes for your State Pension entitlement.
If you plan on withdrawing from your State Pension, check that you paid adequate National Insurance Contributions during your employment years. This way, you’ll get the most out of your retirement income.
A pension calculator is your best friend right now. It’ll make retirement planning simpler. The calculator can tell you when you can afford to retire and if you should work for a few more years to grow your pension pot.
Early Pension Release In Simple Terms
Simply put, you can only withdraw money from your pension is you’re 55, ill, or meet specific requirements set out by your provider. Otherwise, you can’t release your pension early. To stop people from withdrawing their retirement early, HMRC asks a substantial tax fee on every early pension withdrawal to deter people too soon.
Scammers feed on these early pension release endeavours. Don’t let anyone other than you provider or the HMRC help you with your funds. It could be dangerous to your investment. You could lose all your pension to these scammers. HMRC also fines you for this.
If you’re suspecting a scam, call the Financial Conduct on 0800 111 6768 or go to FCA.org.
Claiming Your Pension through PensionBee
Drawdown is made simple at PensionBee. All your pensions are combined into one simple online plan. State Street Global Advisors, BlackRock, HSBC and Legal & General will manage your funds on your behalf.
You’ll be able to track the performance of your investment online as well. Accessing your funds is also done in a few easy steps. Just have your bank details in order, and you’ll be paid within 7-10 working days. Easy as that!
A Quick Side Note:
Social Security is a matter that’ll come up when you’re trying to claim your State Pension. What does it entail? You can only claim your State Pension if you have paid NIC or you have been given UK National Insurance contributions (NIC). What are NIC’s? These contributions are the UK’s social security contributions.
In the UK, the State Pension2 ages have been everchanging since April 2010. It’s currently 66 for men and women. However, there is talk of changing State Pension ages again. So you’ll have to be on the lookout for when this age changes if you’re planning to claim your State Pension.
From the age of 55, usually, you’ll be able to get your money from your pension, if you’re living in the UK. This is long before you are allowed to get your State Pension, which is currently set at the age of 66.
Well, this means that you’re 66 years old at the moment. This means that you can currently claim your State Pension. You meet the minimum required age perfectly. This age may change in the future, but at the moment it’s set at 66 for men and women.
If you’re 55 years old, you’re allowed to claim your pension early. However, if you want to claim your State Pension, you’ll have to wait another 11 years to do so. However, your workplace pensions and personal pensions are available once you’re 55 years old.
What great news! You can get your pension money from a young age if you need to. The only pension you’ll need to wait for is your State Pension.