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Scottish Sun
4 days ago
- Business
- Scottish Sun
How to boost your state pension for free with 1% trick and get £700 extra a year
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) SOON-TO-BE retirees can boost their state pension for free and get up to nearly £700 extra a year with a simple trick. Many apply for the state pension as soon as they reach the eligible age of 66 (which will rise to 67 by the end of 2028), but if you delay your claim, you could get higher payments. Sign up for Scottish Sun newsletter Sign up 1 Soon-to-be retirees could boost their state pension Credit: Getty You can get an extra 1% for every nine weeks that you delay your claim. That means that for every year you delay, you boost your payout by just under 5.8 per cent. 'Deferring your state pension can be a sensible option if you don't need the income immediately and want to boost the payments you receive later in retirement,' said Jon Greer from the investment platform Quilter. How much will you get? The full new state pension is worth £230.25 a week. That means that over the full 2025-26 tax year, you could boost your payments by about £13.35 a week, which is about £694.20 a year, according to Quilter. These figures are based on the current state pension amounts, but as this increases each year thanks to the triple-lock, the actual amounts you add are likely to be higher. The boosted amount increases each year based on the Consumer Price Index. You may want to consider deferring your state pension if you don't urgently need it, such as if you are still in work. Deferring your pension also has tax benefits, said former pensions minister Steve Webb, who now works at the pensions consultancy LCP. 'Drawing a pension alongside a wage can mean a lot more of your pension is taxed - even potentially at a higher rate - than if you wait until your earnings have stopped.' However, there are risks to consider, said Tom Selby from the investment platform AJ Bell. He said: 'If you die earlier, you might not recoup the state pension income you gave up in return for the increase, so if you have health issues then deferral might not be the best option.' Deferring the state pension could be a big mistake for those eligible to claim Pension Credit - which is a handy benefit worth up to £3,900, which also unlocks the Winter Fuel Payment, worth up to £300. Martin Lewis reveals nearly 800,000 Brits could claim hundreds in free cash - here's how to apply That's because your boosted state pension payments could tip you over the threshold for Pension Credit, which is £227.10 if you are single, or a joint income of £346.60 if you have a partner. If you get the full new state pension, you are already over this threshold. It would take about 17 years to make back a year of the state pension payments lost by deferring, although this does not factor in future state pension rises. Who is eligible? Most people can defer their state pension, but there are some exceptions. Time spent in prison or when you or your partner get certain benefits does not count towards the nine-week deferrals. You cannot build up extra State Pension during any period you get: Income Support Pension Credit Employment and Support Allowance (income-related) Jobseeker's Allowance (income-based) Universal Credit Carer's Allowance Carer Support Payment Incapacity Benefit Severe Disablement Allowance Widow's Pension Widowed Parent's Allowance Unemployability Supplement You cannot build up extra State Pension during any period your partner gets: Income Support Pension Credit Universal Credit Employment and Support Allowance (income-related) Jobseeker's Allowance (income-related) The rules are different if you reached your state pension age before April 6, 2016. Instead of a 1% increase for every nine weeks you delay, you get 1% for every five weeks that you don't claim, and you will be given a choice over how to receive your boosted state pension amounts. You can either choose to get higher weekly payments, or you can opt for a one-off lump sum (although this is only an option if you deferred for at least 12 months in a row). The lump sum payment also includes interest of 2 per cent above the Bank of England base rate, which would be 6.25 per cent. If you choose to get a lump sum fixed payment, consider putting it in a high interest savings account. If you're planning on not touching your state pension until at least another five years, consider investing it to make your money work as hard as you can. How to delay You don't need to do anything to delay your state pension - you simply just don't claim it. When you want the money, you can make a claim on the website. The Department for Work and Pensions will then add the boosted amount onto your payments. The DWP should send you a letter no later than two months before you reach state pension age explaining how to claim it.
The Sun
4 days ago
- Business
- The Sun
How to boost your state pension for free with 1% trick and get £700 extra a year
SOON-TO-BE retirees can boost their state pension for free and get up to nearly £700 extra a year with a simple trick. Many apply for the state pension as soon as they reach the eligible age of 66 (which will rise to 67 by the end of 2028), but if you delay your claim, you could get higher payments. 1 You can get an extra 1% for every nine weeks that you delay your claim. That means that for every year you delay, you boost your payout by just under 5.8 per cent. 'Deferring your state pension can be a sensible option if you don't need the income immediately and want to boost the payments you receive later in retirement,' said Jon Greer from the investment platform Quilter. How much will you get? The full new state pension is worth £230.25 a week. That means that over the full 2025-26 tax year, you could boost your payments by about £13.35 a week, which is about £694.20 a year, according to Quilter. These figures are based on the current state pension amounts, but as this increases each year thanks to the triple-lock, the actual amounts you add are likely to be higher. The boosted amount increases each year based on the Consumer Price Index. You may want to consider deferring your state pension if you don't urgently need it, such as if you are still in work. Deferring your pension also has tax benefits, said former pensions minister Steve Webb, who now works at the pensions consultancy LCP. 'Drawing a pension alongside a wage can mean a lot more of your pension is taxed - even potentially at a higher rate - than if you wait until your earnings have stopped.' However, there are risks to consider, said Tom Selby from the investment platform AJ Bell. He said: 'If you die earlier, you might not recoup the state pension income you gave up in return for the increase, so if you have health issues then deferral might not be the best option.' Deferring the state pension could be a big mistake for those eligible to claim Pension Credit - which is a handy benefit worth up to £3,900, which also unlocks the Winter Fuel Payment, worth up to £300. Martin Lewis reveals nearly 800,000 Brits could claim hundreds in free cash - here's how to apply That's because your boosted state pension payments could tip you over the threshold for Pension Credit, which is £227.10 if you are single, or a joint income of £346.60 if you have a partner. If you get the full new state pension, you are already over this threshold. It would take about 17 years to make back a year of the state pension payments lost by deferring, although this does not factor in future state pension rises. Who is eligible? Most people can defer their state pension, but there are some exceptions. Time spent in prison or when you or your partner get certain benefits does not count towards the nine-week deferrals. You cannot build up extra State Pension during any period you get: Income Support Pension Credit Employment and Support Allowance (income-related) Jobseeker's Allowance (income-based) Universal Credit Carer's Allowance Carer Support Payment Incapacity Benefit Severe Disablement Allowance Widow's Pension Widowed Parent's Allowance Unemployability Supplement You cannot build up extra State Pension during any period your partner gets: Income Support Pension Credit Universal Credit Employment and Support Allowance (income-related) Jobseeker's Allowance (income-related) The rules are different if you reached your state pension age before April 6, 2016. Instead of a 1% increase for every nine weeks you delay, you get 1% for every five weeks that you don't claim, and you will be given a choice over how to receive your boosted state pension amounts. You can either choose to get higher weekly payments, or you can opt for a one-off lump sum (although this is only an option if you deferred for at least 12 months in a row). The lump sum payment also includes interest of 2 per cent above the Bank of England base rate, which would be 6.25 per cent. If you choose to get a lump sum fixed payment, consider putting it in a high interest savings account. If you're planning on not touching your state pension until at least another five years, consider investing it to make your money work as hard as you can. How to delay You don't need to do anything to delay your state pension - you simply just don't claim it. When you want the money, you can make a claim on the website. The Department for Work and Pensions will then add the boosted amount onto your payments. The DWP should send you a letter no later than two months before you reach state pension age explaining how to claim it. How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension.
Scottish Sun
28-05-2025
- Business
- Scottish Sun
Thousands of grandparents are missing out on pension boost worth £6,600 – how to claim now
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) MORE than 100,000 grandparents have boosted their state pension just by looking after their grandchildren. But thousands of eligible grandparents could be missing out on nearly £6,600 in retirement if they do not claim the credits, experts warn. 1 Thousands of grandparents could easily boost their state pension Credit: Getty Specified Adult Childcare credits are a type of National Insurance credit that can help you qualify for the full state pension. They can be claimed when a parent who receives child benefit is paying National Insurance and can work because another family member is looking after their child. The child must be aged under 12. This does not need to be full-time care and can include picking up a child from school or looking after them during the school holidays. Anyone with gaps in their National Insurance record can claim the credits to help them qualify for the full state pension. You need 35 years of National Insurance contributions to get the full new state pension, which is worth £230.25 a week. But only 104,433 people have successfully claimed the credits in the past five years, according to exclusive data from HM Revenue and Customs (HMRC) obtained by wealth manager Quilter. Just 42,962 people applied for the credits last year, even though 78% of applications are successful. Jon Greer, head of retirement policy at Quilter, said awareness of the credits 'remains far too low'. He added: 'Many eligible grandparents could be missing out on thousands of pounds simply because they don't realise they qualify or how to apply. How to track down lost pensions worth £1,000s 'We would welcome a renewed effort by the government to raise awareness of these credits, particularly among lower-income families and communities where gaps in NI records are more common.' Every year of transferred credit will boost your state pension by £330 a year. This could add nearly £6,600 to the value of your state pension over the course of a 20 year retirement. You can also backdate your claim to 2011, when the credits were introduced. What are the different types of pensions? WE round-up the main types of pension and how they differ: Personal pension or self-invested personal pension (SIPP) - This is probably the most flexible type of pension as you can choose your own provider and how much you invest. - This is probably the most flexible type of pension as you can choose your own provider and how much you invest. Workplace pension - The Government has made it compulsory for employers to automatically enrol you in your workplace pension unless you opt out. These so-called defined contribution (DC) pensions are usually chosen by your employer and you won't be able to change it. Minimum contributions are 8%, with employees paying 5% (1% in tax relief) and employers contributing 3%. - The Government has made it compulsory for employers to automatically enrol you in your workplace pension unless you opt out. These so-called defined contribution (DC) pensions are usually chosen by your employer and you won't be able to change it. Minimum contributions are 8%, with employees paying 5% (1% in tax relief) and employers contributing 3%. Final salary pension - This is also a workplace pension but here, what you get in retirement is decided based on your salary, and you'll be paid a set amount each year upon retiring. It's often referred to as a gold-plated pension or a defined benefit (DB) pension. But they're not typically offered by employers anymore. - This is also a workplace pension but here, what you get in retirement is decided based on your salary, and you'll be paid a set amount each year upon retiring. It's often referred to as a gold-plated pension or a defined benefit (DB) pension. But they're not typically offered by employers anymore. New state pension - This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £203.85 a week and you'll need 35 years of National Insurance contributions to get this. You also need at least ten years' worth to qualify for anything at all. - This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £203.85 a week and you'll need 35 years of National Insurance contributions to get this. You also need at least ten years' worth to qualify for anything at all. Basic state pension - If you reach the state pension age on or before April 2016, you'll get the basic state pension. The full amount is £156.20 per week and you'll need 30 years of National Insurance contributions to get this. If you have the basic state pension you may also get a top-up from what's known as the additional or second state pension. Those who have built up National Insurance contributions under both the basic and new state pensions will get a combination of both schemes. Am I eligible? To qualify you must be an eligible family member, such as a grandparent, aunt, uncle or older sibling. You need to be below the state pension age, which is currently 66. There is no minimum number of hours you need to look after a child to qualify, so you should be able to claim even if you care for them just one day a week. Only one credit is available per claim, regardless of how many children you are looking after. For example, if you look after two of your grandchildren who live in the same household then you can only claim one credit. How do I claim? You need to wait until October 31 to apply for the current tax year. This is because HMRC needs to check that the parent or main carer already has a qualifying year of National Insurance. They should check their National Insurance record to make sure they have credits they can transfer. Parents and carers can check their National Insurance record on the website. Before you apply for the credits you will need the child's details and a record of the periods when you provided care for them. You will also need the contact details of the child's parent or main carer who receives the child benefit. Both you and the person who receives the child benefit must sign a declaration on the application form. You then need to complete the CA9176 form online. How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension. You cannot save your progress, so ensure you have all the information to hand before you get started. You will then need to print and send the form to HMRC using the postal address on the application. Once you have sent the form you can check when you should expect to receive a reply online. For more information visit How can I make sure my application is approved? Around 9,289 applications were rejected last year, according to official figures. Most applications are declined for one of two reasons. The first is that the person claiming already has a qualifying year of National Insurance, for example if they are working or receiving other credits. Or they could be receiving child benefit for the child themselves, so the National Insurance credits are applied automatically. Errors on the application can also cause it to be rejected. Double check your form for mistakes before you submit it to avoid being caught out. Do you have a money problem that needs sorting? Get in touch by emailing money-sm@ Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
The Sun
28-05-2025
- Business
- The Sun
Thousands of grandparents are missing out on pension boost worth £6,600 – how to claim now
MORE than 100,000 grandparents have boosted their state pension just by looking after their grandchildren. But thousands of eligible grandparents could be missing out on nearly £6,600 in retirement if they do not claim the credits, experts warn. 1 Specified Adult Childcare credits are a type of National Insurance credit that can help you qualify for the full state pension. They can be claimed when a parent who receives child benefit is paying National Insurance and can work because another family member is looking after their child. The child must be aged under 12. This does not need to be full-time care and can include picking up a child from school or looking after them during the school holidays. Anyone with gaps in their National Insurance record can claim the credits to help them qualify for the full state pension. You need 35 years of National Insurance contributions to get the full new state pension, which is worth £230.25 a week. But only 104,433 people have successfully claimed the credits in the past five years, according to exclusive data from HM Revenue and Customs (HMRC) obtained by wealth manager Quilter. Just 42,962 people applied for the credits last year, even though 78% of applications are successful. Jon Greer, head of retirement policy at Quilter, said awareness of the credits 'remains far too low'. He added: 'Many eligible grandparents could be missing out on thousands of pounds simply because they don't realise they qualify or how to apply. How to track down lost pensions worth £1,000s 'We would welcome a renewed effort by the government to raise awareness of these credits, particularly among lower-income families and communities where gaps in NI records are more common.' Every year of transferred credit will boost your state pension by £330 a year. This could add nearly £6,600 to the value of your state pension over the course of a 20 year retirement. You can also backdate your claim to 2011, when the credits were introduced. What are the different types of pensions? WE round-up the main types of pension and how they differ: Personal pension or self-invested personal pension (SIPP) - This is probably the most flexible type of pension as you can choose your own provider and how much you invest. Workplace pension - The Government has made it compulsory for employers to automatically enrol you in your workplace pension unless you opt out. These so-called defined contribution (DC) pensions are usually chosen by your employer and you won't be able to change it. Minimum contributions are 8%, with employees paying 5% (1% in tax relief) and employers contributing 3%. Final salary pension - This is also a workplace pension but here, what you get in retirement is decided based on your salary, and you'll be paid a set amount each year upon retiring. It's often referred to as a gold-plated pension or a defined benefit (DB) pension. But they're not typically offered by employers anymore. New state pension - This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £203.85 a week and you'll need 35 years of National Insurance contributions to get this. You also need at least ten years' worth to qualify for anything at all. Basic state pension - If you reach the state pension age on or before April 2016, you'll get the basic state pension. The full amount is £156.20 per week and you'll need 30 years of National Insurance contributions to get this. If you have the basic state pension you may also get a top-up from what's known as the additional or second state pension. Those who have built up National Insurance contributions under both the basic and new state pensions will get a combination of both schemes. Am I eligible? To qualify you must be an eligible family member, such as a grandparent, aunt, uncle or older sibling. You need to be below the state pension age, which is currently 66. There is no minimum number of hours you need to look after a child to qualify, so you should be able to claim even if you care for them just one day a week. Only one credit is available per claim, regardless of how many children you are looking after. For example, if you look after two of your grandchildren who live in the same household then you can only claim one credit. How do I claim? You need to wait until October 31 to apply for the current tax year. This is because HMRC needs to check that the parent or main carer already has a qualifying year of National Insurance. They should check their National Insurance record to make sure they have credits they can transfer. Parents and carers can check their National Insurance record on the website. Before you apply for the credits you will need the child's details and a record of the periods when you provided care for them. You will also need the contact details of the child's parent or main carer who receives the child benefit. Both you and the person who receives the child benefit must sign a declaration on the application form. You then need to complete the CA9176 form online. How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension. You cannot save your progress, so ensure you have all the information to hand before you get started. You will then need to print and send the form to HMRC using the postal address on the application. Once you have sent the form you can check when you should expect to receive a reply online. For more information visit How can I make sure my application is approved? Around 9,289 applications were rejected last year, according to official figures. Most applications are declined for one of two reasons. The first is that the person claiming already has a qualifying year of National Insurance, for example if they are working or receiving other credits. Or they could be receiving child benefit for the child themselves, so the National Insurance credits are applied automatically. Errors on the application can also cause it to be rejected. Double check your form for mistakes before you submit it to avoid being caught out. .
Telegraph
20-05-2025
- Business
- Telegraph
HMRC hits hundreds of thousands of pensioners with unexpected tax bills
HM Revenue & Customs (HMRC) has hit hundreds of thousands of pensioners with shock tax bills. The tax office issued 1.32m 'simple assessments' in the 2023-2024 tax year, up 74pc from 757,745 the year before, according to data revealed via a Freedom of Information (FOI) request. This marks the highest number on record and more than double the average annual volume for the previous six years. A simple assessment is a way of collecting tax without requiring the taxpayer to complete a self-assessment return. They are typically used for pensioners or employees who underpay tax. In its FOI response, HMRC said one of the main reasons for the rise was frozen income tax thresholds which have pulled more pensioners into the tax system. Experts said the tax demands 'catch people off-guard', especially pensioners who assumed their incomes fell below the £12,570 tax-free personal allowance threshold. Income tax thresholds have been frozen since 2022 under the Tories and are due to remain so until 2028. At the same time, the state pension 'triple lock' has pushed up retirees' weekly payments, meaning millions more have been dragged into the tax net – or higher tax brackets. Most retirees also receive income from private pensions. The HMRC data shows a steep acceleration in the number of taxpayers being automatically assessed for underpaid tax. HMRC issues a simple assessment when it believes the calculation is straightforward, often where it holds enough information about a taxpayer's income. While intended to streamline tax collection, their growing use reflects in part the increasing number of pensioners being drawn into the tax system. 'Fiscal drag in action' Steve Webb, a former pensions minister, now partner at pension consultants LCP, said, 'hundreds of thousands' of the recipients of simple assessments were likely to be pensioners. He added: 'Many retired people on modest incomes may have hoped that their days of having to deal with HMRC were over, but the long-term freeze in tax thresholds has changed the situation. 'Although most pensioners will still not have to file a tax return, hundreds of thousands will still get an unwelcome year-end tax demand from HMRC. 'As well as representing an unwelcome bill, pensioners with queries may find it is very hard to get through and speak to someone on the phone if they have questions about their assessment – leading to further stress and frustration. 'For the good of pensioners and the efficiency of the system as a whole, the whole system needs to be reviewed.' Jon Greer, head of retirement policy at Quilter, said: 'This is yet another sign of fiscal drag in action. Millions are sleepwalking into the tax system through no fault of their own. 'The sharp rise in simple assessments reflects how frozen tax thresholds and higher state pensions are creating more tax liabilities for older people. Many of them may not even realise they owe anything until HMRC's letter arrives. 'While simple assessments are meant to simplify tax collection, they can catch people off guard, especially pensioners who don't complete a tax return and assume their income is below the tax-free threshold. 'Unexpected tax bills can be scary, especially if you are already struggling with your finances.'
