Millions of Brits missing out on pension top-up payment worth up to £9000 a year – check if you’re eligible
MILLIONS of Brits are missing out on a pension top-up payment worth up to £9000 a year.
The trick is to check if you’re eligible for Pension Credit or Attendance Allowance – here’s how.
Pension credit is worth around £3,900 a year on average and unlocks many other benefits, such as council tax reductions and help with energy costs.
There are other bonuses available too, such as cold weather payments, free NHS dental treatment and a free TV licence.
But recent figures exclusively revealed to The Sun show more than £2.1million pension credit is going unclaimed.
To qualify for pension credit you must live in England, Scotland or Wales and have reached State Pension age (66).
You can start your application up to 4 months before you reach State Pension age.
You can apply by phone, by post, or online.
Attendance Allowance can provide additional financial support of up to £434 each month, some £5,644 each year, for those with a long-term health condition or disability.
This means that those available for both Attendance Allowance and Pension credit could receive up to £9,544.
You can check if you’re eligible for Attendance Allowance by completing an Attendance Allowance claim form.
There are nearly 12.7 million people over State Pension age and the Department for Work and Pensions (DWP) estimates that 880,000 are eligible for Pension Credit and not claiming the income-related benefit.
Similarly, more than one million pensioners are believed to be eligible for Attendance Allowance – which is not affected by income or savings.
It is also tax-free and is not counted as income when it comes to claiming Pension Credit.
It comes as we told how savers could end up thousands of pounds worse off in retirement due to rip-off pension charges.
Brits who have worked multiple jobs over their career likely have cash sitting in old workplace pensions – but “hidden” fees could be eating away at their retirement savings.
And by not keeping on top of your charges and shopping around for the lower deals – you could actually end up £37,000 worse off when you retire.
When you join a new company, you are usually “automatically enrolled” into its workplace pension scheme.
You then contribute a percentage of your salary towards your pension each month – the minimum is 5% – while your employer contributes a minimum of 3% unless you opt-out.
The scheme also levies a charge from your total savings every year to help cover its running costs.
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Harriet Meyer explains seven simple savings habits you can use to boost your pot.
TOP UP STATE PENSION
Currently you can claim your state pension from the age of 66. This rises to 67 by 2028.
You need 35 years’ worth of National Insurance contributions to claim the full amount of £221.20 a week (£11,500 a year).
You need ten years to get any state pension at all.
Becky O’Connor, director of public affairs at online finance platform PensionBee, says: “If you are short, you can top up your state pension by ‘buying’ years, usually only from the previous six tax years.
“The amount you should get back in extra state pension income is usually more than the cost of buying the years.”
It costs about £824 to buy a missing year. This boosts your pension by around £329 a year. Over 20 years, that’s £6,580 in extra state pension.
Find out if you have any gaps at gov.uk/check-national-insurance-record.
MAXIMISE FREE CASH
IF you have a company pension, make sure you are getting all you can from your employer.
Currently, you should contribute at least five per cent of your salary into one, while your employer must pay in a minimum of three per cent if you earn more than £10,000 a year.
But some firms allow employers to pay in more. Some will match your contributions, paying in the same amount as you contribute to your pension.
This can make a massive difference to the size of your pension over a long period.
For example, a 49-year-old earning £30,000 and starting to save eight per cent into their pension could have a pot worth £60,000 by age 67, says Aviva.
That would buy an annual income of about £2,992 if they took 25 per cent as a tax-free lump sum.
But if they boosted their contributions to a total 20 per cent of their salary, with an extra ten per cent from their employer, they could have £230,000 by age 68.
This could buy an annual income of about £11,870 after taking 25 per cent as a cash lump sum. That’s an extra £8,878 every year in retirement.
Even paying a little extra into your pension can help.
Alistair McQueen, head of savings and retirement at Aviva, says: “Every penny benefits from extra investment growth, extra tax relief, and maybe an extra contribution from your employer.”