The state pension forecast is a Government tool that can be accessed online and could help future retirees to get a feel for various aspects relating to their pension. The service can be used to discover how much state pension one can get when they can get it and possibly even how to increase it.
The state pension forecast can provide an idea of how much one’s state pension payments will be once they become eligible by reaching state pension age, and begin to claim it. The state pension age is currently 66 in the UK for both men and women.
It can also show people the number of qualifying years they have on their National Insurance record. The estimate of how much one can expect to receive from their state pension is then based on their National Insurance contributions, the number of full years they have accumulated and any additional state pension they have amassed.
The ‘Check your state pension forecast’ can be accessed through the Government Gateway, and by going through the process, one will be provided with the following information about their pension:
A state pension forecast for when one is due to qualify for it, a state pension forecast as of the start of the last tax year, one’s National Insurance record (including any gaps and part years), and a Contracted-Out Pension Equivalent estimate.
To access the tool through GOV.UK Verify, one will need three things; A UK address, a mobile phone and at least one valid photo ID from any country.
If ones does not have an account, they must set one up so that they can confirm their identity before checking their state pension. Once this has been done, they will be able to access the information they require regarding their state pension.
It is still possible to get a paper state pension forecast from the Department for Work and Pensions (DWP), however, people are being encouraged to go online to get the information using the Check your State Pension service instead. The online service will also provide information about how one can increase their state pension, if they can.
However, there are caveats that explain that the estimate is not a guarantee, is based on the current law, and does not take any increase due to inflation into account.
The forecast can provide an idea of what to expect with regard to state pension, but it is not a perfect system. This is partly because the relevant agencies, such as HMRC, the DWP and private or workplace pension schemes have not always shared all of their information with each other, which can reduce the accuracy of the forecast.
This applies to data provided to the government about one’s contracting-out history, which may not be up-to-date and could therefore mean the value of one’s COPE payments are calculated using incorrect rates. The problems relating to the accuracy of the forecast are still to be fully addressed, particularly as it relates to how much less one will receive if they have been contracted out for a significant period of time.
HMRC had planned to send out information to millions of people who were contracted out between 1978 and 1997, but these were abandoned back in 2017.
People who will reach state pension age in more than 30 days can ask for a state pension forecast via phone or post. For example, they can call the Future Pension Centre and request a state pension forecast. They can also complete a BR19 application form and send it to the Future Pension Centre to receive a state pension forecast. These forms can be downloaded from GOV.UK.
It is worth noting that people cannot use the service if they are already receiving their state pension, or if they have deferred it.
The full new state pension is £179.60 per week, which equates to £9,339.20 each year. The full basic state pension is £137.60 per week, which adds up to £7,155.20 per year.
The future of the state pension has been up in the air in recent weeks and months, with the Government announcing a suspension of the triple lock for the 2022/23 tax year, meaning pensioners will receive less than they were expecting.
The triple lock is a Government commitment to increasing the value of the state pension by at least 2.5 percent every year. The policy dictates that state pension must increase by the highest of three elements; inflation, average earnings growth, or 2.5 percent.
However, due to the economic impact of the COVID-19 pandemic, the figure for average earnings growth appeared to be considerably higher than had historically been the case, with pensioners set for an increase of more than eight percent to their state pension income as a result.
Therefore, the Government decided to temporarily ignore the triple lock for next year, meaning that the state pension will now increase by the higher of inflation or 2.5 percent. Inflation is expected to be the number used, as the all-important figure will be announced next month.
With all of these changes, it is more important than ever for people to be aware of their pension forecast, and the state pension forecast tool is one potential way of making people aware of their retirement outlook.