More than one-half of the 3.5 million workers ceasing working around 2016 and 2020 may not qualify for the full new state pension, a study has shown.
Government figures produced in response to a freedom of information request by a popular pension consultant proved about two million workers will receive less than the £148.40 a week new state pension, outlined by the government, in its initial 5 years.
The greater number of customers falling short of the full state pension, are almost definitely to have been contracted out of the second state pension (including SERPS) in the course of their working lifespans. Customers who will get much less than 100 % are quite likely to have cut off National Insurance contributions at some stage of their working life, including mothers or the self-employed.
With the new pension freedoms denoting that they will be at liberty to enjoy all their individual pension savings, it is important that they obtain a correct state pension forecast.
Bob Cook of Best Pension Annuity stated that the formula for working out the new state pension entitlement “is confusing”.
For anyone who has been contracted out of the second tier state pension it includes making a reduction from their state pension entitlement to reflect the fact that they have been capable of accumulating a bigger private pension using the National Insurance rebate.
The flat rate state pension will be active from April 2016. It intends to clarify the current two-tier system.
Independent exploration* identified that merely 45 % of those retiring in the inaugural five years from April will obtain the full state pension and one million are going to acquire lower than 86 %.
Bob Cook an experienced Income Drawdown expert at Best Pension Annuity said: “The new state pension will inevitably be a simpler and just. Nevertheless in the short term it will be complicated and numerous people are most likely to acquire less than they may have counted on.
“With the new pension liberties signifying that people can be unconstrained to enjoy all their individual pension savings, it is vital that they acquire an appropriate state pension forecast. In the absence of this, they could get a nasty bombshell when they do get to state pension age.”
It’s by no means too late to start saving for your retirement, call Best Pension Annuity on 020 33 55 4827.