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Many of us will have started the New Year with a resolution to save money or pay off existing debts, but one area which often gets bypassed in tough economic times is pensions. The consequences of this short-term thinking could be big, though, and the Department of Work and Pensions has some tips on planning for your retirement now so that when it comes to your first New Year in retirement you don’t look back on all those broken resolutions with regret.
Many of us will have started the New Year with a resolution to save money or pay off existing debts, but one area which often gets bypassed in tough economic times is pensions.
Women typically tend to cut back on pension payments when their children are young and other expenses take priority. A recent Workingmums’ poll shows that more than half of working mums polled had no pension at all and would be relying on the state pension when they reach old age.
The consequences of this short-term thinking could be big, though, and the Department of Work and Pensions has some tips on planning for your retirement now so that when it comes to your first New Year in retirement you don’t look back on all those broken resolutions with regret:
1. Find out how much State Pension you’re entitled to when you retire. While many of us assume we will receive something once we retire, two fifths of us don’t know how much State Pension we will receive. The basic State Pension is currently £97.65 for a single person and £156.16 for a couple. But not everyone will get that amount– it all depends on how long you have worked and how much you’ve paid in NI contributions. To find out how much you are likely to get, you can get a pension forecast for free. Visit
2. Find out your State Pension Age. The age at which women can start claiming the State Pension is rising and will reach 66 for both men and women by 2020. To find out more visit .
3. Find out if your employer offers a workplace pension and join it. Worryingly, 44% of working age employees are not contributing to any kind of private pension. You could be missing out on £700 a year on top of your salary – that’s a whopping £32,000 over your working life – by not taking advantage of the contributions your employer will make into your pension. If your employer doesn’t offer a pension scheme now, they will have to by law from 2012. For helpful information about starting a pension, visit www.moneymadeclear.org.uk or call 0300 500 5000.
And don’t forget, it’s better to save early. The cash you put in and interest you earn can grow tax-free for longer in a pension pot.
4. Trace old pensions you’ve lost track of or forgotten about. People rarely have a job for life these days. In fact most of us expect to change jobs three or four times during the course of our working lives, building up a collection of pensions pots as we go along. Get help to track down forgotten pensions using the free Pension Tracing Service: www.direct.gov.uk/pensiontracing or call 0845 600 2537.
5. Let them know you care. An estimated one million people have given up work to care for someone, but many do not realise they can claim Carer’s Credit so they can still get their full State Pension in retirement. Carer’s Credit is not a cash sum, but a National Insurance credit for the weeks you’ve provided care for others, which means you can continue to build up your State Pension even if you’re not in paid work.
If you think you or someone you know could be eligible for Carer’s Credit, then visit www.direct.gov.uk/carers or call 0845 608 4321 (Telephone) or 0845 604 5312 (Textphone).(People receiving Carers Allowance don’t need to claim for Carer’s Credit as they get it automatically).