State pension payments will rise by 10.1 percent from April 10, 2023, in a bumper boost for older people. The increase has been delivered via the triple lock, which this year works on September 2022’s CPI inflation figure.
The rise means the full new state pension will be £10,600 per year, although some may get less if they were contracted out before April 6, 2016.
The full basic state pension will be £8,122 per year with the boost.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The forthcoming rise to state pension will come as a welcome boost to pensioners who have been struggling with steep increases to their cost of living in recent months.
“The state pension forms the backbone of people’s retirement income and with inflation remaining sticky, the 10.1 percent boost will come in very handy.”
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However, it is worth acknowledging not everyone will receive the full state pension amount, so there are certain ways Britons may be able to boost their sum.
Firstly, Ms Morrissey recommended people go online and check their state pension entitlement on the Government’s website.
This will provide a clearer picture of what one can expect to receive, as well as their state pension age.
Claiming Child Benefit was also recommended by the expert as a good way of boosting the state pension.
She explained: “Women in particular miss out on valuable state pension credits when they are at home looking after children. However, if they claim Child Benefit, they will receive National Insurance credits that count towards their state pension.
“Many women have missed out on this in the past because their husband claimed the Child Benefit rather than them. Others missed out when they opted out of Child Benefit after the introduction of the high-income Child Benefit tax charge.
“However, you can register for Child Benefit without claiming the cash – so there’s no charge to pay but you still get the credits. If you claim Child Benefit in your name, then you will get the NI credit towards your pension.”
Specified Adult Childcare Credit may also be a good course of action as it relates to Child Benefit.
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If a person is under state pension age and looking after a family member, such as a grandchild, under the age of 12 while their parent or carer works, they could qualify for NI credits.
The working parent essentially transfers the NI credit they get from Child Benefit to the person looking after the child, and it could boost a state pension.
Some may also wish to buy NI credits, but only if they can spare the cash, Ms Morrissey said.
She continued: “You can plug gaps in your NI record by buying voluntary class three NI contributions. Buying a full extra year costs around £800, though partial years will be cheaper.
“For each year bought you get 1/35th of a year’s state pension – around £275. This means you effectively earn your money back in around three years, so it can prove very good value.”
However, it is particularly important for Britons to check with the DWP that this will actually boost the state pension – as it doesn’t always do so.
Finally, some individuals may be eligible for Pension Credit if they are of state pension age and on a low income.
Ms Morrissey said: “Pension Credit aims to top up the incomes of the poorest pensioners and acts as a valuable gateway to other benefits such as help with NHS costs, council tax and a free TV licence for the over 75s. Pension Credit claimants are also entitled to a £900 cost of living payment due to be paid in three segments over the coming months.
“The qualifying period for the first payment was January 26 to February 25, 2023. However, as claims can be backdated for three months you could receive this if you make a successful claim by May 19, 2023.”
Pension Credit can be worth some £3,500 per year, according to the DWP, and could make a big difference.
