Will my UK State Pension payments go up in 2021? Given the current economic climate, thousands of pensioners in the UK are probably asking themselves this question.
Let’s take a look at whether you can expect a little extra cash in your State Pension payments this year.
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Who is eligible for the UK State Pension?
To be eligible for the UK State Pension you need to have reached a certain age and made a certain number of years’ worth of National Insurance contributions throughout your working life.
The current state pension system is split into two tiers: the basic State Pension and the new State Pension.
- Men born on or after 6 April 1951 and women born on or after 6 April 1953 get the new State Pension.
- Those who were born before the above dates get the basic State Pension.
Will the UK State Pension increase in 2021?
In a word, yes. The Department of Work and Pensions has confirmed that State Pension payments are set to increase by 2.5% in 2021. The increase will kick in from 12 April.
The state pension actually increases every year in line with the triple lock rule.
This rule guarantees that State Pension payments increase each year by whichever is the highest of the consumer prices index (CPI), earnings growth or 2.5%.
This year’s increase will be 2.5% because it is the highest of the three variables.
How much will I get?
Pensioners receiving the full new State Pension will get an additional £4.40 per week, raising the rate from £175.20 to £179.60.
Those on the old basic State Pension will receive an additional £3.40, raising payments from £134.25 to £137.65.
However, not everyone gets the full rate.
To receive the full new State Pension, for example, you need at least 35 qualifying years of National Insurance payments. For the full basic State Pension, you need 30 qualifying years.
You can check your State Pension forecast and find out how much you’ll get on the gov.uk website.
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Do I need to apply for the UK State Pension increase?
No. You do not have to do anything. The higher rate will apply automatically.
How can I boost my retirement income?
The State Pension is likely to be a significant portion of your retirement income. But it might not be enough to support you entirely. That is why it might be a good idea to look into other ways to supplement your retirement income.
You might, for example, be able to boost your retirement pot by taking advantage of your workplace pension.
As of 2018, every company in the UK is required to enrol eligible employees in a workplace pension scheme. Your employer will also make a contribution to the scheme. The more money you put into such a scheme, the larger your retirement nest egg will be.
The truth is that when it comes to retirement planning, there is a lot to think about. That is why sometimes, consulting with an independent financial planner or adviser may be beneficial.
They can help you organise your retirement plans, set goals for the future and, importantly, give you advice on how much money you’ll need to retire comfortably.
