State Pensions
This gives a regular income once a person reaches state pension age.
It is based on National Insurance contributions and the amount you get depends on how much you paid in
The age at which your ageing parent can claim State Pension is changing:
- It is currently 65 for men
- State Pension age for women is gradually increasing from 60 to 65.
- This affects women born after 5 April, 1950.
- State Pension age for both men and women will be increasing again to at least 68
The amount of State Pension your elderly relative gets depends on their National Insurance contributions and sometimes those of their current, or former spouse or civil partner
Your ageing parent may have made contributions from their earnings, or have been credited with them by the Government, if they were caring for a child or disabled person
As well as the Basic State Pension, they may get Additional State Pension, or Graduated Retirement Benefit, which are based on the amount they earned when working (and therefore the amount they paid through National Insurance).
The State Pension increases every April. The current Government has promised to increase the basic pension by whichever is higher out of consumer price inflation, average earnings or 2.5%. Increases in the Additional pension are usually based on consumer price inflation
Your ageing parent won’t normally receive their State Pension automatically on reaching pension age. They need to make a claim
If they haven’t been contacted about claiming their state pension by three months before they are due to reach pension age, call the Pension Service on 0845 300 1084.
Your ageing parent can claim their State Pension even if they decide to continue working past State Pension age. They can also postpone claiming their State Pension, known as ‘deferring’ and get a higher pension, or a lump sum when they do claim.
A State Pension Calculator is available on the direct.gov.uk website.
Pension Credit
This is a benefit for people aged 60 or over, which is designed to ensure that pensioners have a guaranteed minimum income
The age at which they may qualify is linked to the date at which they may claim a state pension and depends upon date of birth
There are potentially two elements to Pension Credit and entitlement may be to either, or both:
- Your ageing parent may be entitled to a guarantee credit, if their income is below the standard minimum guarantee of £137.35 per week for a single person, or £209.70 per week for a married couple
- Even if they receive income of up to about £188 per week for a single person, or £277 per week for a married couple, they may be entitled to a savings credit at a rate of up to £20.52 for a single person, or £27.09 per week for a married couple
In either case, they may also be entitled to additional amounts to cover housing costs. or if they or their spouse have additional needs resulting from disability.
A calculator is again available on the direct.gov.uk website.
Further information on benefit entitlement can be found at the government website
Dave Robinson is a Partner in Albert Goodman Chartered Accountants and a Director of Albert Goodman Chartered Financial Planners and WBW Chartered Financial Planners
Dave is an ex-practising Accountant, with a background in personal taxation. For the last 20 years, he has practised exclusively in the field of personal financial planning and he is one of few Independent Financial Advisers to have achieved both Chartered and Certified Financial Planner status. He also holds an Investment Management Certificate and he is a Member of The Society of Trust & Estate Practitioners (STEP) and The Society of Later Life Advisers (SOLLA). This makes him one of the most highly qualified advisers in the South West of England.
Contact Dave on 01934 642222 or [email protected]
