How much is the state pension in 2022 and will it increase?

THE state pension is the income paid to you by the Government after you reach a certain age.

It is increased each year to keep up with rising living costs like food and bills.

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The annual rise is usually calculated according to what is known as the triple lock.

But because of the coronavirus pandemic that has temporarily changed and the rise is fixed by the double lock for one year only.

But how much do you get for your state pension? Here we take a closer look. 

How much is the state pension in 2022?

For the 2021-22 tax year, the new full state pension is set at £179.60 a week. 

This new pension system was introduced in 2016.

This is what the state pays those who reach state pension age after April 6, 2016.

The basic state pension is set at £137.60 per week.

This is paid under the old pension system and is for those who retired before April 6, 2016.

There is also the additional state pension under the old system, which is an extra payment on top of the basic state pension some are entitled to.

From April the state pension amounts will increase by 3.1% for the 2022-23 tax year.

The new full state pension will go up to £185.15 a week.

The basic state pension will rise to £141.85 a week.

How much state pension will I actually get?

The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life. 

If you have made at least 35 years of qualifying NI contributions, you may qualify for the maximum amount, outlined above. 

The same is true if you have received equivalent credits on your NI record for raising children or providing care. 

If you don’t have 35 years, you may be able to top up your record by paying in voluntary NI contributions. 

To get the full basic state pension you will need 30 years of NI contributions or credits. 

To get any state pension at all, you will need at least 10 years on your NI record. 

What age do I get the state pension?

In response to rising life expectancy, the age at which you become eligible to receive the state pension has been going up.

The age is now 66 for both men and women and set to reach 68 by 2039. 

Reviews are planned every few years. To find out your state pension age, head to gov.uk. 

What is the triple lock and why has it been paused?

The state pension goes up each year according to a three-way policy called the triple lock.

This means pensioners get an increase equivalent to the highest of either average earnings, price inflation, or 2.5%.

The aim is to ensure pension incomes keep pace with everybody else’s.

But things have been complicated due to the strong rebound in earnings as the economy recovers from the pandemic – and higher inflation.

As a result, pensioners had been in line to get a bumper increase in 2022 as wages were growing at a rate of 8%.

Wages were removed from the calculation, leaving inflation or 2.5%, whichever is higher.

Inflation for the end of last year came in at 3.1% and so that figure has been used to work out this year’s rise.

How do I claim the state pension?

You won’t automatically get the state pension – you need to claim it once you’re eligible.

You should receive a letter no later than two months before you reach state pension age, explaining what to do. Find out more here. 

You can choose to defer getting the state pension – you don’t have to take it as soon as you are eligible when you reach state pension age.

Leaving your state pension untouched can boost the amount you eventually get (see more below).

Check if you can claim pension credit on top of the state pension

If you’re single and your weekly income is less than £177.10 per week (or in a couple and your joint income is under £270.30 per week), you may be eligible to claim pension credit.

This is a means-tested benefit to help those on lower incomes by giving them extra money throughout retirement. Find out more here. 

How the State pension is unlikely to be enough for a comfortable retirement

It’s important not to make the assumption that you’ll be able to live comfortably on the state pension alone when you stop working. 

For the current tax year (2021-22), the maximum state pension amounts to an annual income of £9,339. 

As a guide, you might want to aspire to a retirement income of at least half of your working income. 

It comes as new research shows that a third of young Brits aren’t saving up for their retirement.

The most recent figures suggest that you need £20,800 a year, or £30,600 for a couple, for a moderate retirement.

While you may be able to boost your state pension by deferring it, most of us will need to think about putting money away ourselves via a personal or workplace pension.

Deferring the state pension 

If you opt to defer your state pension, your entitlement increases by the equivalent of 1% for every five weeks you do so.

Deferring a year currently increases the payment from £179.60 a week to £190.02 a week.

This could make sense if you are still working at state pension age, or have another retirement income. 

But research carefully before making any decision. 

Saving into a pension yourself

The best way to save for retirement is by putting money into a personal or workplace pension – and having this as well as the state pension. 

Saving into a pension can be a very tax-efficient way to save, as contributions benefit from tax relief.

Under current rules – known as the ‘annual allowance’ – you can contribute £40,000 every year, and receive this tax break on the whole amount. This allowance applies across all the schemes you belong to.

With a workplace pension, you may get the added benefit of employer contributions as well – further boosting your retirement fund.

Watch out for the lifetime allowance

You need to be aware that if the amount you have tucked away into a pension pot goes over a certain amount, known as the ‘lifetime’ allowance,’ you will face charges.

This is currently set at £1,073.100. 

How to request a state pension forecast

As the state system can be tricky to navigate, a key part of any pension planning involves requesting a state pension forecast.

This will help you get your head around how much you could be eligible to receive, and from what age. 

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This post first appeared on thesun.co.uk