3 ways to get the most from your State Pension despite the triple lock freeze

In September 2021, the work and pensions secretary Thérèse Coffey announced that the government would be breaking a key Conservative Party manifesto promise and suspending the State Pension triple lock.

The “fair and reasonable” decision was made following a “statistical anomaly” resulting from the government’s Coronavirus Job Retention Scheme that would have seen the State Pension rise by more than 8% next year.

Instead, the suspension has resulted in a rise of 3.1% for 2022, in line with the Consumer Price Index (CPI). This is a rise of £5.57 a week, or £289.64 a year.

Despite the triple lock suspension, the State Pension is still an important part of your retirement planning and there are steps you can take to ensure you make the most of it. Here are three of them.

1. Check your National Insurance record and fill in any gaps if you can

The amount of State Pension you receive is linked to the National Insurance contributions (NICs) you make. To receive the full State Pension, you’ll need 35 “qualifying years” of NICs.

If you have between 10 and 35 years of NICs the State Pension you receive will be calculated based on the exact number of years. You usually won’t receive a State Pension at all where your number of qualifying years is less than 10.

Your first step should be to check your entitlement.

You can view your National Insurance record to check for gaps and if you have any, it might be possible to make top-ups to plug them.

The full entitlement for 2021/22 is £179.60 a week, or £9,339.20 a year.

For 2022/23, the full entitlement is £185.20 a week, which totals £9,630 a year.

2. Remember that you can defer the State Pension if it’s affordable

When you reach State Pension Age (currently 66 but rising to 67 between 2026 and 2028) you won’t automatically begin receiving the State Pension. Instead, you’ll need to apply for it.

You can claim your State Pension online if you are within four months of your State Pension Age or if you have received a letter from HMRC inviting you to start claiming.

If you don’t claim – or forget to claim – your State Pension, it will automatically defer. Before you reach State Pension Age, though, give some thought to whether you might make deferment a conscious choice.

Your decision will depend on the pension provisions you have elsewhere, as well as your non-pension income. If you can afford to defer, you’ll receive a higher weekly amount when your pension payments do commence.

Your State Pension will increase by the equivalent of 1% for every nine weeks you defer, meaning that you must defer for at least nine weeks. The extra amount is paid with your regular State Pension payment when it commences. It totals just under 5.8% for every 52 weeks.

If you defer for less than 12 months, you can still claim your State Pension online, when you are ready. You’ll need to phone HMRC directly to claim if your deferment period has exceeded a year.

3. Check if you’re owed compensation

Back in March 2021, Which? reported that tens of thousands of women are owed compensation for missed State Pension payments thought to total around £3 billion.

The issue was caused by a failure of the Department for Work and Pensions (DWP) to apply an automatic uplift – known as the “married women’s rate” – to married, divorced, or widowed women’s pensions. The issue dates back to March 2008 when the DWP updated their computer system.

The married women’s rate would typically uplift a woman’s pension by 60% of their husband’s or ex-husband’s basic State Pension.

You could be owed compensation if you are:

  • A married woman whose husband turned 65 before 17 March 2008 and you never claimed an uplift to the 60% rate
  • A widow and your pension didn’t increase when your husband died
  • A widow and you think you may have been underpaid while your late husband was still alive, even if you think you are receiving the correct pension now
  • You are over 80 and receiving a basic pension of less than £80.45 a week
  • A widower or heir of a married woman who has now died, but who was underpaid State Pension during their lifetime
  • A divorced woman, especially if you divorced post-retirement.

Get in touch

Your State Pension will hopefully not be your main source of pension income but rather a base on which to build your retirement plans. At HDA, we want to help make your retirement goals a reality and we will aim to do that by looking at your whole financial position.

Whether you’d like help maximising your State Pension or with any other aspect of your long-term retirement plans, we can help so please get in touch. Email enquiries@hda-ifa.co.uk or call 01242 514563.

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.

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