Chapters Financial News

The recent headlines about aspects of the State Pension have not been overly positive, focusing on the suspension of the triple lock and the Department for Work and Pensions (DWP) mistake, through which £1bn was underpaid to 134,000 individuals, mainly women, as revealed on 22 September and attributed to human error. Bearing in mind that many retirees rely on these funds, is does create worry for many.

The government has confirmed that those who have been underpaid will receive what they are due. More on this welcome, but long overdue, financial news can be found here: https://www.bbc.co.uk/news/business-58640197

We noted the detail on the triple lock changes in our blog at the beginning of September: https://www.chaptersfinancial.com/blog/national-insurance-state-pension-triple-lock-changes-september-2021

We have always been advocates of checking an individual's State Pension entitlement (along with all their private and workplace pensions) to make sure that they are up to the maximum available, and to top up where appropriate. We have recommended topping up to three clients in the last month where the value of the future State Pension benefit and its increases far outweighs the capital required to top up, based on normal longevity.

It is also important to confirm to a client when State Pension benefits will be available, managing expectations as to whether this valuable income (currently around £9,339 pa at the standard maximum) starts at age 66, 67 or, for the younger of us, even later. This may add into the individual's evolution of their financial planning in terms of the timing of their retirement.

As a reminder, there are a few quirks with the State Pension, noting that currently it is paid every four weeks, so there are effectively 13 payments in a calendar year, and that it is paid gross, but is taxable. This usually means that it consumes most of an individual's tax-free income allowance (which is £12,570 gross in this tax year), thereby increasing any income tax take on other pensions and income in payment. Any uplift in the State Pension income is calculated in the autumn and applied in April of the following year.

With these revelations coming to the headlines during September 2021, let's not forget that the State Pension remains a valuable benefit and if you have not checked your position recently, then this can be achieved online here: https://www.gov.uk/check-state-pension

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Keeping a watchful eye on your overall pension planning, either as an individual or with a spouse/partner, can be vital in ensuring that it meets your future household requirements. Taking good financial advice across the age range can be valuable in managing expectations and making changes where needed to reach financial goals.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS

Director

CFP Chartered FCSI

Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899