As we know, the government in the UK obviously provides support, but it is best to take some steps on your own in this direction. In order to retirement pension in the UK could meet our needs, we should mainly learn what we get from the government and how to start planning for your own retirement.
Why is pension in the UK synonymous with its planning?
Planning for the retirement in the UK may seem insignificant especially at a young age, but I advise that the sooner we start saving for your retirement, the better secure our future …. Is that right? The insurance company currently assumes that employees themselves save for their retirement, and the allowance is only its complement, but we know that it is not. What is more, I also mention here that everyone working in the UK can also benefit from: Personal Pension – this is a different private pension and Company Pension (some forget about it), and it is worth to use them, because you get back money in the form of tax exemption. We get also additional contributions from the employer, moreover, we have the ability to block the money until retirement.
After how many years we can get retirement pension in England and how new pension looks like?
Namely, the last time a lot has changed and also the pension segment, now the new retirement pension will be paid from 6 April 2016 – men born after 6 April 1951, and women born after the 6th April, 1953. Here, I will say that pension, known as „state pension” is based on the record of social contributions each of us separately, of course, the contributions must be paid at the time of economic activity, usually we need about 10 ,,qualifying years” to get a new retirement pension. A new in the system is that you do not have to pay contributions for 10 years in a row. Here so-called – “Qualifying year” is very important – it is the tax year in which:
- we worked as an employee and we paid NIC contributions.
- we received National Insurance credits
- we paid voluntarily NIC.
- However, we have a certain amount of contributions or credits in order to tax year counted as “qualifying year”.
Of course, paying social contributions we must earn a minimum of £ 153 per week at one employer as an employee. We can also work as self-employed and pay contributions of Class and Class4.
Example: If we earn between £ 111 and £ 153 per week and we will not pay anything, but we will get national insurance credits, which will be counted for future pension, then new retirement pension will be possible. Retirement pension in England as in any country is always changing and more you will learn from the government website at this address: retirement pension in England.
What must not be forgotten? And what you need to know to get retirement pension?
- So that pension in the UK was the opportunity for us to real money, you need to get it, to do this you must calculate your retirement age. To do this properly you can simply use the calculator, which can find no problem in the Internet.
- You should know that since December 2018 the retirement age for both men and women is increasing, and by 2020 it will reach 66 years old…
- Full pension in 2015 will be not less than £ 148.40 per week (currently £ 113.10).
- There is no system of automatic selection of pensions, we must make an application before reaching retirement age…
- Retirement in the UK depends on the so-called “Qualifying years”.
- At present, in order to receive a full pension you must have 30 “qualifying years”, but if you want to get a new retirement pension “we need 35” qualifying years (in total) “.
- In order to retirement pension in the UK have been granted to us we do not have to give up work after reaching retirement age and earnings and number of hours will not affect retirement, but it can happen that we will have to pay tax on pensions, as well as on earnings.
Therefore retirement in England currently depends on our social contributions, so you want to make sure that in fact we pay them and if we do not do, you should think about paying voluntary contributions (Class 3 NICs).
How to use private retirement and company pension?
At the beginning I will deal with – PERSONAL PENSION
It is the pension system obtained from a bank, building society or life insurance. In order to pension retirement in the UK was granted from these institutions, we must allow that these institutions can invest on our behalf savings over the years preceding retirement. To encourage residents to save for a future pension, tax incentives were introduced from the amounts allocated for this purpose and this means that the earned money that we pay to the retirement account in a bank, building society or insurance will pay less tax. It is important that we decide when we want to get our private retirement pension and we can choose that we will start to take contributions, when we finish 55 years old.
Therefore Personal Pension so far been recommended for:
- unemployed people, who can pay contributions
- employees, whose employer does not offer a pension scheme
- employees, who do not meet the conditions of the company’s pension fund
- employees, who wish to enlarge pension retirement obtained from the company’s pension fund
COMPANY PENSION is in turn a pension fund established by the employer and its conditions will depend on agreement with the employer, usually here worker pays into a fund a certain percentage of earnings and at this point the employer pays twice and he covers the costs of administering the fund. In this way, pension in the UK is growing two times faster than if we had spared it alone, but is is important to note that at the moment in the UK the retirement age for women and men is 65 years, but British rule which, obliges employers to mandatory referral to retire employees who have completed 65 years was liquidate. Knowing life, these numbers will change our against us. In the article where to look for jobs in the UK I wrote that it is very important to find an employer who offers a personal pension (retirement plan). It just so happens that this bonus is very important and many people do not pay attention to it.
Remember that once you decide on an additional retirement, before you sign a contract you should check out cashback websites whether they have some repayments. For example, in imutual, there is return £ 81.60 for the signing of an agreement with Bestinvest on SIPP account. About the SIPP accounts you will learn from the article that has already been prepared under the title inexpensive SIPP accounts. And in quidco you will get £ 83.33 return for signing an agreement with Fidelity SIPP. So it is worth to do some research whether somewhere there is organized a promotional campaign.
Here, I will write in a few sentences whether it is possible to transfer pensions to Poland and vice versa.
So here there is a problem, because the transfer of the Basic State Pension and the Additional State Pension is not possible since worked years in the UK are not added to years in Poland and also vice versa. However, it is possible to draw your pension both in Poland and in England – provided that you have a lot of paid contributions. Therefore, pension in the UK is only valid in England, but is able to transfer Private Pension, but here there is some obstacles, namely in our country pension funds that meet the requirements imposed by HMRC do not yet exist, so the transfer of pension is associated with tax – 55 percent of the transferred amount of money. Pension systems in Poland and England are a little different due to the fact that we are in the European Union all the years worked in any EU country are counted to the total of years. So you can work for 10 years in England and 30 years in Poland, ie a total of 40 years, but from England will get the contributions for 10 years. I propose that you should take care of these things ie. you should collect all the documents proving our work (wage) in all countries. It is worth to make scans of a tax deduction or payslips.
Basic pension – what we should get and what to expect:
At present, retirement in England is £ 115.95 per week, it is not known whether soon you will not have to pay tax on your basic state pension (but I already mentioned about it). If we are married or in a partnership we can get additional state pension to £ 69.50 per week if:
- we have a basic state pension
- we are married or in a partnership
- we meet the eligibility rules
At any time, we can also use a retirement calculator to get a quick estimate of your retirement age or eligible for a detailed report on pensions.
We can also qualify for supplementary pension or when we have a low income, for Pension Credit.
How your pension is paid?
Days of pension are paid according to the Social Security number, for example, the last 2 digits of your National Insurance means the day of the state pension, when you receive remuneratione:
|Nr from||Nr to||days of the week|
Here, our first payment is made at the end of the first full week after reaching retirement age.
The following example shows how pension in England looks like.
,,We reach retirement age on Monday 16th December and our first payday is on Friday. So the first full week ends on Friday, because on Monday we reached the retirement age and from Saturday 21th December we will be charged money. Cash here will not be paid for the period from 16th to 21th December, because it is less than one week. The basic state pension is usually paid every four weeks on account (without the first week in which we retire is from 16th to 21th December). We always get pension with understatement days, so we get pension in the past four weeks and not coming weeks”.
If we have less than worked 30 years, basic pension will be 115.95 pounds per week, but we have a higher pension paying voluntary social contributions. Using the retirement calculator we can get to know how many years we already have and for which state pension can now try. During the work we pay National Insurance so that we can seek a faster classification of pension. You should must meet these requirements:
- We are employed and earn more than 153 pounds per week from one employer
- we live on our own account paying social ontributions
We can retirement pension in the UK even if we do not pay social contributions, but only if we earn less than 153 pounds per week. In that time we can also get the qualifying year (the same condition). We can also obtain National Insurance i.e. design of our pensio, if we cannot work, for example due to illness or disability and caregiver takes care of us, then the state grants subsidy to such people.
At the end want to point out that men born before 1945 and women born before 1950 must have more „qualifying” years to obtain full state pension and a minimum number of years to get any state pension, such as:
||The number of years required for a state pension||Number of years needed for each retirement|
|Men born: before 6 April 1945||44||11|
|Women born: before 6 April 1950||39||10|
Pensions in England – you should use a calculator.
The best way to reflect on how important is a retirement pension is to show you how much you will have when you retire. I urge you to do a simulation of your pensions on the official government website at: state pension calculator.