While your State Pension might not be your main source of income in retirement, it should still form an important part of your long-term retirement planning. That means understanding how much you are entitled to and ensuring you receive your full entitlement.

Recent research suggests that more than a third of UK retirees – including those in semi-retirement – failed to check their State Pension forecast before retiring. Of those that did check, 14% found that they were due to receive less than they expected.

Understanding the amount that you are due to receive will allow you to incorporate the State Pension into your retirement plans. You’ll also need to think about the actions you can take to increase the amount if it is lower than you hoped.

Here’s your guide to understanding your State Pension entitlement.

Understanding what you will get

You’ll be eligible for the new State Pension if you reached State Pension Age from 6 April 2016. (Reaching State Pension Age before this date means you are eligible under the old rules.)

For the 2021/22 tax year, the full new State Pension you could receive is £179.60 per week. This amounts to £9,339.20. The actual amount you get, though, depends on your National Insurance record.

To receive the full State Pension, you’ll need 35 “qualifying years”.

Qualifying years can include years in which you were:

• Employed and earning more than £183 a week from a single employer
• Self-employed and paying National Insurance contributions
• Claiming Child Benefit for a child under 12
• Receiving jobseeker’s allowance or Employment and Support Allowance
• Receiving carer’s allowance.

If you have less than 10 qualifying years you won’t be eligible to receive any State Pension.

The amount you receive will be calculated based on full qualifying years where they equal between 10 and 35 years.

You can use the government’s website to check your National Insurance record and get an idea of the State Pension amount you will receive.

Decide if you want to defer

In some circumstances, you might find that the amount you are due to receive exceeds £179.60. This will usually only happen if:

• You have over a certain amount of Additional State Pension
• You defer taking your State Pension.

If you reach State Pension Age but do not want to claim it yet, you can defer your payments. Because you have to claim the State Pension, not claiming it results in an automatic deferral, so you don’t need to take any action.

As long as you defer for at least nine weeks, your State Pension will increase by the equivalent of 1% for every nine weeks you defer. This should work out at just under 5.8% (or £540) for each year deferred.

Reports suggest that up to a quarter of over 65s are unaware of the option to defer their State Pension.

Be sure to get a State Pension forecast

Once you know how much State Pension you are due to receive, you can decide if you want to claim or defer.

You can use the government’s website to get a State Pension forecast and doing so well in advance of your retirement date is a great idea.

Checking in advance means that you have accurate figures to use in your retirement planning. If you find you have gaps in your record, you’ll have time to consider making voluntary contributions to help bridge the gap.

Note that making voluntary contributions won’t always increase your State Pension but we can help you decide if topping up is the right decision for you. Get in touch if you are worried about the amount you are due to receive.

1000s of people have missed out on the correct State Pension

Estimates suggest that more than 200,000 women could have received the wrong State Pension amount due to HMRC errors, with some over-80s having received no State Pension at all.

The cost of the underpayment could be as high as £2.9 billion.

The issues might affect you if:

• You are a married woman who reached State Pension Age before April 2016
• You are a woman who is or has been divorced, and you have previously substituted your NI credits for your ex-husbands
• You are a widow (you may have been underpaid before the death of your husband)
• You are one of the 100,000 men and women over the age of 80 who have not previously received the State Pension due to them (this error is expected to cost the government £570 million each year for the next five years).

Get in touch

The true value of the State Pension can be easily underestimated but it should be the bedrock of your long-term retirement planning.

For this reason, it is crucial that you understand the amount you will receive and that you receive your full entitlement once you reach State Pension Age.

We can help you find out your State Pension entitlement and then ensure that this amount plays a part in the retirement plan we help to put in place for you. Please get in touch if you’d like to discuss any aspect of your long-term financial or retirement plans.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.