Busting the State Pension myths

Sarah Pennells: Hi, I'm Sarah Pennells and I'm the Consumer Finance Specialist here at Royal London.

Clare Moffat: And I'm Clare Moffat and I'm Royal London's pensions expert. And we're going to spend the next 45 minutes or so talking about the State Pension and ten myths around it. Sarah, it's a big topic and there's so much we could talk about.

Sarah Pennells: Yeah, you're absolutely right. Now, let's face it, the State Pension is the foundation of most people's income in retirement, so it's important to understand how it works. But the rules and regulations around the State Pension are complicated. We've done a lot of research into what people understand about the State Pension and we know that there are lots of rules and regulations that people aren't familiar with. And over the years, lots of myths have been doing the rounds, some of which people believe. So, we'll be spending the next 30 minutes guiding you through these myths and explaining the rules step by step. As we go through, we'll point you in the direction of further information including guides and articles that we've written. Before we get started, just a reminder that if you'd like to ask a question, we've left plenty of time at the end to answer them and we would love to hear from you. As with all our webinars, we can't give advice or answer a question that's about your specific circumstances or a Royal London policy. Now, if you'd like to leave a comment or ask a question, you can do so via the Slido link. Also, we are recording this webinar and we will share a link to the recording afterwards with everyone who registered for it. And finally, if during the webinar the streaming freezes, please refresh your page and I've been assured that should get rid of the gremlins.

Clare Moffat: But before we move onto busting some myths, we need to explain what the State Pension is. So, let's start with some of the basics. What is the State Pension and how much do you get?

Sarah Pennells: Well, the State Pension is a payment that you get from the government when you reach State Pension age and the full rate of the new State Pension is £221.20 a week, which is £11,541 a year. And for a long time, the State Pension age stayed the same. It was 60 for women and 65 for men. But it has changed over recent years, so the question is how old do you have to be before you can get your State Pension? So, we're going to have our first poll now and we would love you to vote on it. The question we're asking is at what age can pensioners currently claim their State Pension? So, do please vote.

Clare Moffat: Oh, it's still moving around a little bit, Sarah.

Sarah Pennells: Okay, so this is really interesting because we've got at the moment about 60% of people are saying 67, about a third are saying 66. Very few saying 60 or, or other ages we've got. So, it is still settling down, but the actual answer is 66. So, about 38% of people got the right answer, which is that you have to be 66 years old before you can claim the State Pension. But because the State Pension age has changed for both men and women, you may know people who are older who've been getting their State Pension since they were 65, or if they're a woman, younger. And while the State Pension age is 66 at the moment, it's due to rise again in the future. So, some people may have to wait until they're 67, which was one of the really popular answers in the poll, 68 or possibly even older before they can claim their State Pension. The current timetable means that anyone born after April 5th 1960 will be affected by future rises in the State Pension age.

Clare Moffat: But before we think about actually receiving the State Pension, let's look at some myths about the State Pension. So, myth number one, everyone gets the State Pension. So, this is a myth, I'm afraid. Although the majority of people do get the State Pension, not everyone will. In order to get the full State Pension, you need to have paid or been credited with 35 years of National Insurance. Now, that's putting it in simple terms. Now, our research shows that almost half of people didn't know they needed 35 years of National Insurance, but it's really important that you understand this, or you could inadvertently miss out on the State Pension. However, according to government figures in 2022, only half of people received the full new State Pension, so many people could be missing out. So, Sarah, how do you build up those 35 years of National Insurance?

Sarah Pennells: Well, most people will be working and will probably pay National Insurance contributions either through PAYE, or if they're self-employed. And we start paying National Insurance if we earn around £12,500 a year. But if you're a very low earner, you won't pay National Insurance and that could mean you have a gap.

Clare Moffat: There are three ways that you can build up something that's called a qualifying year. Now, don't worry about the jargon, qualifying year is just a term you're likely to see in the State Pension information, so we thought it was important to include. So, you can build up a qualifying year by paying National Insurance because you're working, by buying voluntary National Insurance which we'll talk about a later, or by getting National Insurance credits. National Insurance credits count towards your State Pension in the same way as paying National Insurance does, but you normally get given these credits as a result of receiving certain state benefits. For the new State Pension, which was introduced for people reaching State Pension age after April 2016, you need a minimum of ten qualifying years to get any State Pension. Now, that means that if you only have nine qualifying years, then you might get no State Pension.

Sarah Pennells: Now, we've said that you need a minimum of 35 qualifying years, but a really common question we're asked is why do you need to carry on paying National Insurance even if you have 35 qualifying years? And it's a good question and it's one that I think puzzles a lot of people. Now, the reason you have to keep on paying National Insurance until you reach State Pension age is that National Insurance payments go towards funding the NHS and also to pay some state benefits including the State Pension. So, even if you've already got a full National Insurance record of 35 years and you're due to get the full State Pension amount, you can't simply decide not to pay National Insurance if you're working. In simple terms, the National Insurance you're paying today is used to pay benefits for those people claiming payments today. It, sort of, doesn't go into a pot for your own State Pension retirement. Okay, let's move onto our next myth, number two. If you have 35 years of National Insurance, you will get the full State Pension. Now, we're going to debunk this myth, but you might think that sounds a bit contradictory to what we just said about needing 35 years of National Insurance. So, we'll just take a few minutes to get there and hopefully it will all make sense. So, where are we starting? We're starting with the State Pension forecast. First of all, your State Pension forecast will tell you when you reach State Pension age and how much you're on track to get as weekly, monthly and annual amounts. But Clare, these amounts aren't guaranteed, are they?

Clare Moffat: No, they're not. It's made very clear in a disclaimer that the State Pension forecast isn't a guarantee and is based on current law and doesn't include any increase due to inflation. I think it's probably worth checking your forecast from time to time, especially if you've been contracted out at any point. And I'll explain what that means in a minute. The next figure on your State Pension forecast is an amount that you're entitled to based on your National Insurance record so far. And below that, an amount that you would get if you continued to pay National Insurance or to be credited with it until you reach State Pension age. Your forecast will also tell you that if you're working until you reach State Pension age, you'll still have to carry on paying National Insurance.

Sarah Pennells: And there's one figure that some people may see on their State Pension forecast that  I'm keen we explain. And that's the COPE figure. Now, COPE stands for Contracted Out Pension Equivalent, another bit of jargon. We get lots of questions about contracting out and the COPE figure. So, Clare, what is it?

Clare Moffat: Well, if you worked for an employer before 2016 and joined their pensions scheme, then you may have been contracted out. This was particularly common with public sector final salary pensions, but used to be the case with some private sector pensions as well. Now, again, don't worry about the jargon here. Contracting out just meant that you and your employer paid less National Insurance contributions, but there was a promise that the occupational pension you were in had to pay a certain level of benefits. So, what does that all mean? Well, your State Pension might be lower, but you will have additional benefits in your private pension.

Sarah Pennells: And this is where it can get very confusing for people, because you could have paid 35 years of National Insurance but not be entitled to the full new State Pension amount because you were contracted out. Now, in that case, part of your pension, called the COPE as Clare mentioned, the Contracted Out Pension Equivalent, will be paid by your employer when you retire. You won't get that from the Department of Work and Pensions in the same way that you receive the rest of your State Pension. And we regularly get a lot of questions about being contracted out, both from people who want to know what it means and how it works and from people who want to know if there's anything they can do to get more State Pension from the Department of Work and Pensions. Now, we will be talking about that a bit later.

Clare Moffat: So, having talked you through the State Pension forecast, we'd like to know if you've seen a copy of your State Pension forecast. So, please vote in our poll. Oh.

Sarah Pennells: This is really impressive. So, about three quarters of, the figures are changing quite a lot, so I'll let them settle down for a moment, but I say three quarters, I've finished saying it, it's now 65%. But anyway, the majority of people have got hold of their State Pension forecast so far. But quite a few people, so one in five, one in four, it's changing, saying they're not sure how to find it. Encouragingly, one in ten saying they're going to look after this webinar, so extra points for you. Thank you very much. So, yes, it's settling down now. Just over half, 53% say they have. But if you're someone who hasn't yet got hold of their State Pension forecast, then it is easy to do online. You'll need to go to the gov.uk/check-state-pension site. And if you've got a Government Gateway account, you can fill in an online form that tells you how much State Pension you're due to get and when you reach State Pension age. Now, if you don't have a Government Gateway account, you will need to set one up, but it is easy to do as long as you have an email address. But there are, Clare, two other ways of getting your State Pension forecast, aren't there?

Clare Moffat: That's right, Sarah. Applying online is the quickest way, but if you can't apply on the internet, then you can fill in form BR19. Now, that can be printed off from the gov.uk website and then you send it off by post, or you can phone up the Future Pension Centre and ask them to send that form out to you. But you have to be reaching State Pension age in more than 30 days to do this. And this slide has a reminder of the web address and telephone number to get your State Pension forecast. Now, onto myth number three. Having children means that you'll miss out on the State Pension. Now, you may have heard that women get a lower State Pension because they've had children, but this shouldn't be true for most people and that's because you'll automatically get National Insurance credits if you're a stay-at-home parent or guardian who's registered for Child Benefit for a child under twelve. But there are some people who could miss out on the State Pension and that's to do with a tax charge introduced about eleven years ago. In 2013, the government introduced something called the high-income child benefit tax charge. This tax charge meant that couples where one partner earned more than a certain amount, it's currently £60,000, could have to pay tax on child benefit. And, as a result, some people decided not to register for child benefit at all because, for some, the tax charge would be the same amount as the child benefit they'd receive. But anyone who has a child should register for child benefit, for each child. If you're having a child with your partner, and one of your earns more than £80,000 a year, then the amount of tax charge you'd pay would be the same as the amount of child benefit you'd receive. So, if you don't want to receive child benefit because it will go straight to HMRC in tax, you can tick a box to opt out of receiving child benefit payments. Registering for child benefit, whether or not you receive any payments, triggers those National Insurance credits and it also triggers a National Insurance number being sent out for the child when they are approaching sixteen. So, to sum up then, it's really important to register for child benefit even if you or your partner earns over £80,000 a year, but if you don't want to receive the child benefit payment, you can opt out of it.

Sarah Pennells: It's also really important that the right person has applied for the child benefit, mainly the parent who isn't working. But what if the other parent, the one who is working, applied? And, again, we're finding a lot of people who don't know about this and the situation where the parent who is working filled in the form and said they didn't want child benefit, but in this situation, you can transfer credits from one parent to another using an online process. Now, this leads us on to myth number four. 'Not working means you'll miss out on the State Pension.' Well, not working means that you don't have to miss out on the State Pension, but there are situations where you could. So, let's explain. You can get National Insurance credits even if you aren't working. Now, some of these credits happens automatically. For example, if you're on benefits, such as Universal Credit, Job Seeker's Allowance, Employment Support Allowance or Working Tax Credit. However, you might have to claim National Insurance credits if, for example, you're on the statutory sick pay and you're not going to earn enough to have a qualifying year. If you're a carer, you may get National Insurance credits automatically, for example, if you're getting Carer's Allowance. But if you're caring for someone but you don't qualify for Carer's Allowance, you may have to apply for National Insurance credits. So, it's worth checking, and you can do this on the gov.uk website. The address is on our webinar page. So, Clare, let's look at our next myth. It's number five. And this is something that we often hear, which is, 'There's nothing you can do about your State Pension when you're older.'

Clare Moffat: Yes, that's right. We do hear that a lot, but that's not necessarily the case. For example, it's possible for a grandparent or certain other family members, under State Pension age, to claim National Insurance credit when they're looking after grandchildren. Perhaps they stopped working to help out with childcare, but they don't have their 35 years of National Insurance contributions. In this case, they can apply for something that goes by the rather clumsy name of specified adult childcare credit. What happens is that the National Insurance credit, that a parent or a carer gets as a result of registering for child benefit, well they're transferred to the grandparent. The parents have to agree to transfer their National Insurance credits, but these credits can be back-dated to 2011. And they also cover non-face-to-face care during the COVID lockdown period. If you want to know more about these credits, then the gov.uk website address we mentioned earlier, has got information on how the credit works and how to apply. Now, in our State Pension research we found out that only 9% of adults over 50 had applied for this. If you have stopped working or are thinking about stopping work to care as grandparents, this is a way to increase your State Pension.

Sarah Pennells: So, time now for myth number six. And that is that, 'Topping up your State Pension is always worth it.' Now, the issue of topping up your State Pension has been in the news quite a lot for a number of months, and for some people, it can be a cost-effective way of increasing their State Pension, but there are situations where it may not be worth doing. First of all, you may be able to claim National Insurance credits. We've been talking about those earlier. Such as carer's credits or grandparents' credits. Now, that means you'd be able to increase the amount of State Pension you get without buying National Insurance credits. Now, secondly, if the State Pension is your only income in retirement, by topping it up, you may disqualify yourself from a benefit called Pension Credit. Pension Credit tops up your income to around the same level as the maximum you can get from the new State Pension and it means you can claim some other benefits as well. But once you're entitled to the full State Pension, you may not be able to get pension credit. And Department for Work and Pension figures show that pension credit is worth an average of £3,300 a year. Now, secondly, if you're still some years away from retiring, then paying for voluntary National Insurance may be a waste of money if you carry on working. That's because you'll be likely to pay National Insurance through PAYE or by being self-employed.

Clare Moffat: Now one of the most asked questions we get is, 'Can I top up my State Pension for those years I was contracted out?' And the answer is no, but let's explain why because this is really complicated.

Sarah Pennells: If you've been contracted out, then your National Insurance record won't show any gaps for those years. That's because you are paying National Insurance contributions just at a reduced rate. So, you won't get the full State Pension amount from the Department for Work and Pensions. As we mentioned earlier, you'll get that COPE amount from your pension scheme. So, if you were contracted out, the only way to increase your State Pension is to build up more qualifying years by paying National Insurance if you're working, or getting National Insurance credits. So, we've busted the myth that topping up your State Pension is always worth it, but let's look at when it is worth topping up your State Pension by making voluntary National Insurance contributions. Now, you may be able to make voluntary National Insurance contributions for years where you haven't already paid National Insurance, or where you've paid it but maybe haven't paid for a full year. Your State Pension forecast will tell you whether or not you're on track to get the full State Pension amount. Now, for most people, the easiest way to see if you have gaps in your National Insurance record and whether it's worth making voluntary National Insurance contributions is to use the government's new online National Insurance tool. In order to use this new online tool, you'll need the government gateway account that we mentioned earlier. Now, this was only launched in April this year and it's really useful. Previously, you had to phone up to find out if you could top up your State Pension. And last year, so many people tried to phone up and buy National Insurance contributions, it actually broke the telephone system. Now, you can access this new online tool at gov.uk/check-state-pension.

Clare Moffat: It's important to find out how much it would be to buy additional years. These are often very good value. You pay a lump sum to buy back one extra year of National Insurance. Now, we said earlier that you need 35 years of National Insurance to get the full new State Pension. So, buying one year, well it gives you an extra 135th of the full pension. At this year's State Pension rates, you would get an extra £330 or so a year for the rest of your life. If you're quoted around £900 to buy a year of voluntary National Insurance, for example, then you only need to survive for three years for this to be worthwhile. Although, it does depend on your tax situation, too. So, this new government tool, well that's going to tell you whether you can make voluntary National Insurance contributions, but the tool can't be used by everyone. So, for example, if you're currently receiving the State Pension, you're self-employed, or you're about four months or less away from State Pension age, it can't be used. If that is the case for you, you'll need to ring the Future Pension Centre or Pension Service, and those numbers are on screen now. Now, you can normally only go back six years to plug any gaps in your National Insurance record, but until April the 5th next year, you can go back further, back to 2006. The door on this opportunity closes next April, and from then, you'll only be able to go back up to six years, so it's really important to check your National Insurance records soon, so that you can take advantage of that extra time before April the 6th next year. So, it's myth number seven now, Sarah. What does it say?

Sarah Pennells: We're raffling through them, aren't we? So, myth number seven is that, 'Moving abroad has no effect on your State Pension.' And there are two parts to this myth. Firstly, what it means if you live abroad while you're working and how that affects the State Pension you're building up, and secondly, how it may affect you if you retire abroad. So, firstly, your UK State Pension will be based on your UK National Insurance record. If you live and work side outside the UK, then you won't be building up UK State Pension entitlement, but you might be building up an entitlement to a government pension in the country you live in. Now, we said right at the start you need ten years of National Insurance contributions to be eligible for any payment under the new State Pension rules. But, and there's always a but, if you've lived in the European economic area, so that's the EU plus Iceland, Liechtenstein and Norway, or if you live in Switzerland or a country that has a social security agreement with the UK, you may be able to use time spent abroad to make up the ten qualifying years, but you'll still only get a State Pension based on the years spent in the UK.

Clare Moffat: So, I think this is best explained in an example. So, if I lived and worked in the UK for seven years, and then I moved to Spain and worked there for the next sixteen years, I'd have built up seven years, seven qualifying years of National Insurance, and that would normally mean I'd get no State Pension, but the years spent in Spain will count to the extent that they will get me to the minimum qualifying years. However, I wouldn't have seven plus sixteen years of State Pension entitlement. I'd still only get my UK State Pension based on the seven years of National Insurance contributions that I've made in the UK, but at least I would get something. However, if I moved to Australia, where there isn't a social security agreement with the UK, I'd get no State Pension because I didn't have the ten years of National Insurance contributions. So, Sarah, this is all a bit head-melty, so I think it's worth a recap.

Sarah Pennells: It really is. So, we're talking about the effect of moving abroad on the State Pension you build up. So, if you move to a country that's in the European economic area or Switzerland, or one that the UK has a social security agreement with, you can use those years to help you get to the minimum State Pension. So, that's what happens when you're working, but what about if you move abroad after you've retired? Before we go onto that, let's, it's time for our next poll. So, please vote. We want to know if you are thinking of retiring abroad. Well, this may not be a surprise. I mean, we haven't had the best summer, so far anyway. We've had about one in 5 saying they're thinking about it. Most people saying, you know, 'Don't plan it,' and a few saying, you know, so, so some saying, 'I'd love to. I'm thinking about it.' Five percent, one in twenty, would love to, but can't afford it.

Clare Moffat: Yeah.

Sarah Pennells: So, interesting. Most people currently thinking of staying here, but of course, that may change as they get nearer to retirement, or indeed, once they listen to what you've got to say.

Clare Moffat: That's true. If you retire abroad, then you might not receive an increase in your State Pension. So, every year, if you retired in the UK, your State Pension rises by what's called the triple lock, okay? That's the biggest of inflation, as measured by the Consumer Price Index, earnings growth, or 2.5%. In April 2023, it went up by 10.1%, and last April, it rose by 8.5%, so quite chunky increases. But, where you retire could have a big effect on your State Pension, and whether it increases. So, if you retire in the European Economic Area, or Switzerland, you'll receive your State Pension, and it will increase in line with the State Pension for people who are living the UK, and that will also happen if you move to a country that has a social security agreement with the UK that allows for increases to the State Pension.

Sarah Pennells: The best thing to do is, if you are thinking of moving overseas, check on the gov.uk website, and do that before you set your heart on a country to retire to. A lot of countries are included, the USA being one, but there are number of countries where you won't receive State Pension increases, such as Canada, New Zealand, and Australia, and that could have a bit effect on the State Pension you receive over the years. So, if you moved abroad today to retire, you would receive your State Pension of £221.20 a week, but it will still be £221.20 a week in twenty years time when friends at the same age in the UK will have seen significant increases to their weekly amount. Now, Clare, moving on, what's our next myth? It's myth number eight.

Clare Moffat: Well, it's the myth that couples get less State Pension than singles. Now, the reason we've included this myth is that it's something that came up in our State Pension research, which we did last year, and we do get questions on this from time to time as well. In broad terms, the State Pension you get is based on your own National Insurance contribution record, but there are some quirks in the system that existed for people who reached State Pension age before April 2016. So, under the current system, anyone who's reached State Pension age on, or after, April the 6th 2016, will receive the new State Pension, and to get the full amount, you'll need to have been credited or paid 35 years of National Insurance. If you've not yet retired, you'll come under that new system, but, if you reached State Pension age before the 6th of April 2016, you'll come under the basic State Pension system. It had different rules about what you got, and in some cases, women who hadn't built up enough of a National Insurance record in their own right, could get a State Pension of up to 60% of the basic element, based on their husband's National Insurance record.

Now, there was some tinkering with the rules in the 2000s so that civil partners were also included. However, the rules changed when the new State Pension was introduced, and since then, for women who reached State Pension age after April the 5th 2016, only a very small group of women who paid a reduced rate of National Insurance, called the Married Women's Stamp, within the last 35 years are able to use their husband, ex-husband, or late husband's National Insurance record. If you, or someone you know, did pay the Married Women's Stamp, then they should know about it, that's because they opted to pay that lower rate, but this is where that myth came from, because some married couples got State Pension payments that were less than the full amount that two individuals would get. But, for most people reaching State Pension age after April 2016, it will be based on your National Insurance record.

Sarah Pennells: Well, we're onto the ninth myth now, and that's one that I've heard many times which is, you don't need to do anything to get your State Pension. Well, I'm afraid you do, and as I said, it is something that a number of people aren't aware of. What happens is that when you're a few months away from your State Pension age, you will be contacted by the Department for Work and Pensions. Now, it should get in touch with you no later than two months before you reach State Pension age, and when it does, it will tell you how to claim your State Pension. If you don't respond to the letter, you won't get your State Pension. It's as simple as that. Now, if you don't want your State Pension once you reach State Pension age, then you don't have to take it. Instead, you can delay or put off claiming it. It's sometimes referred to as deferring your State Pension. Now, you will get a bit extra by delaying claiming your State Pension, but if you want it as soon as you're entitled to it, then you do need to claim it. It's also worth pointing out that the State Pension is usually paid every four weeks, and it's paid in arrears, so that first payment you'll get will be for the previous four weeks, and that means you won't get your State Pension money the day you're entitled to claim it. Now, so we mentioned a moment ago that you can delay or defer taking your State Pension, and that you may inadvertently do that if you don't claim it, buy why would someone want to delay taking their State Pension? What's the advantage, Clare, of doing that?

Clare Moffat: You might still be working when you're approaching State Pension age. So, say you work part time and earn £12,000 a year. As that's under the personal allowance, you won't currently pay any income tax on those earnings, but, if you take your State Pension, then it will use up around £11,500 of your personal allowance, which means only about a £1,000 of your earnings will be tax-free. The other £11,000 will be taxed. If you don't need it, then it possibly makes sense to delay taking it until you do need it. The rules say that you can delay taking your State Pension for as little or as long as you want, but you'll only get any extra money if you put off claiming your State Pension for at least nine weeks. If you do that, you'll get an extra 1% of your State Pension amount for every nine weeks you delay claiming. So, if you were to delay taking your State Pension for a year, you'd get a little under 5.8% extra, on a State Pension of £221.20, that works out as an extra £12.78 a week. But, Sarah, are there any calculations about how long it would take to break even, or kind of putting it crudely, how long would you have to live in order to benefit from delaying taking your State Pensions?

Sarah Pennells: Yes, but, there are some calculations that put a figure on this, for example, saying that if you live for sixteen years, then it will be worth it to delay taking your State Pension by one year. But, it's more complicated than that, as it also depends on how much income tax you might save by putting off claiming as well. So, onto our tenth, our final myth, and that's that the State Pension can be passed on on death or divorce. Now, as you mentioned before, under the old system, the one that was in place before April 2016, women could use their husband's National Insurance record to boost the State Pension they received. Now, that also applied if their husband had died or if there'd been a divorce. The only women who can boost their State Pension, who if they reach-, if they reach State Pension age after April 2016 by using their late husband or ex-husband's national record, are those who paid the Married Women's Stamp, at some point. Now, we mentioned that earlier and said that if it applies to you, you should know about it as you had to opt to pay it.

Clare Moffat: One other point to make, is that when a couple divorce, you can't generally split the State Pension between you, but, there's a part of the State Pension that you could build up under the old system, so that system that was in place before April 2016, and that can be part of the financial assets available to be shared on divorce. However, this can only happen at the time of the divorce. Now, this can be a valuable asset to share, as with all pensions, and this is definitely something which should be discussed with a solicitor and financial advisor.

Sarah Pennells: So, we've covered a lot in the last 25, 30 minutes, and if you want a reminder-, a reminder of some of the key points, there is the web address of our State Pension hub. Now, we have information and guides to the State Pension, now that detail is on screen now. But, we are keen to answer some of your questions. I can see a lot of them have come in, and I think the first one that we'll answer is from Susan, who says, 'How can we check how many years we've paid to date?' And, Clare, this is the thing that we were talking about earlier on, where we mentioned the State Pension forecast and the fact that there's this new, sort of, government tool. So, this is the gov.uk/check-state-pension website, that's the easiest way, you did say there are two other ways you can check your State Pension forecast.

Clare Moffat: That's right. So, you can use the BR19 form, and you can access that on the website, if you've, you know, don't have access then you can phone up and request that form to be sent out to you as well, but checking it online is, is much quicker.

Sarah Pennells: Yes, so, we said earlier on that at the start we did a poll of how many people had got hold of their State Pension forecasts, and a lot of people have, which is great, but it is the kind of thing, it's not a, sort of, once and done. It is worth just checking and keeping track of your State Pension, but that is where you will find the information about how many years of National Insurance you've got, so thank you Susan for your question. Now, we've got a couple of other questions, one from Kirsty, who says, 'I have gaps in my National Insurance contributions due to study and working abroad. Is it worth topping this up?' Now, Clare, this is a bit of a million dollar question.

Clare Moffat: It is. I think it depends how old Kirsty is, really, actually. Because, if, say, Kirsty's under 40, even maybe under 45, it might not be worth it, and that's because if you're going to be working until your State Pension age, you might be able to catch up from those years, and they will help, you know, fill that, kind of, 35 years that are needed. So, you know, Sarah, I think you mentioned earlier, this fact that actually, it's better to wait a while and see that, you know, those gaps will still exist before topping it up, because you could pay to top up, and then actually, be working for those years, so you've essentially, kind of, spent money on something you didn't have to.

Sarah Pennells: Yes, it's a really good point. I suppose, Clare you made a really good point about how old Kirsty is, but also where you're going to continue working, so you said you had gaps in your National Insurance contributions from studying and working abroad, and if you're going to carry on working abroad, then that's a different situation, but if you're working in the UK, and I guess just to bring in the second point you mentioned, which is, that if you're, if your State Pension's going to be your only income in retirement, and we know from our State Pension research that for people who are currently receiving State Pension, so those aged 66 or over, one in three women, almost one in three women say the State Pension is their only income, far fewer men. But, if that is the case, then we mention this benefit called pension credit, that basically tops up your income to, kind of, pretty much the State Pension amount, and in which case, topping up your State Pension, making sure you get the maximum, could, and I emphasise, could, mean you don't qualify for pension credits. So, it's one of those things where it feels like it's a really simple question, and why don't we give you a really simple answer and say, 'Kirsty, go and do this,' or, 'Don't do that,' but it is a bit more complicated.

Clare Moffat: It definitely is a bit more complicated.

Sarah Pennells: So, okay. We've got a question here from Lee, 'Is there a risk that when I reach State Pension age, the law will have changed, and I won't receive a State Pension as I already have a private pension?' And again, it's a really good question, and it's one that-, we, we've been doing a lot of research into the State Pension over the last couple of years because we know it's really important to people. We want to understand what people know about it, how they feel about it, and where we can help with information. And one of the things that's come out of that is that for younger people, they're less convinced that the State Pension will be around when they retire. Thankfully probably for the rest of the world we're not politicians, so we don't have to make those kinds of decisions about what happens to the State Pension. I mean I think the simple answer, and Clare, you might have a different view is at the moment, you know, we know people who are building up their State Pension. It's a payment you get, but we don't know what a future government might do many years down the track. I mean, you know, it's impossible to say.

Clare Moffat: And I think that's exactly what I would say as well. That we can only really talk about the rules as they stand today and what happens right now. Some people are building up their State Pension, and, you know, it is something that is, as you mentioned, a lot of people do rely on, in retirement.

Sarah Pennells: And I think just one other questions because sometimes there's a thing of, you know, 'Well, if I build up a private pension, will that mean I disqualify myself from the State Pension if the government changes the rules down the line?' And as Clare said, we can only talk about today's situation. But I think one thing that's worth thinking about is actually what we mentioned right at the beginning about the State Pension age rising. So, we did the poll where many of you said that the State Pension was 67 which isn't the case at the moment, but that is going to be, the State Pension age in a few years' time and there are plans to increase it to 68 as well in the future. And so, you know, assuming that the system stays as it is now, that you build up the State Pension by paying National Insurance or by get, getting credits, there's still that issue of actually when you get it and that's something that current legislation has built regular reviews into that timetable. So, assuming the State Pension's still paid, we definitely don't know whether it will kick in at the same age that it does now or even current plans.

Clare Moffat: And every few years, this is something that's look at, kind of, State Pension age, it was, you know, within the next two or three years it will be looked at again. So, it's something that's monitored, longevity's looked at, a variety of other factors to see actually do we need to accelerate the increase in State Pension age or is it going to stay, kind of, on track as it is currently?

Sarah Pennells: Yeah, okay, so we've got a question. Now, we mentioned COPE and it's one of those things isn't it that there are so many pieces of jargon around the State Pension. Qualifying years, National Insurance credits, COPE, you know, Contracted Out Pension Equivalent, and we did say it gets head-melty and I think that's really the case, but I think it's good to clarify this. So, we've got this question here from Rebecca saying, 'How can I find out how many years of COPE, of being contracted out I have if that doesn't show as gaps in my forecast?'

Clare Moffat: So, we showed, uh, a copy of the State Pension forecast earlier. Now, that was, kind of, the first part of it, but there is a section, and it has COPE, and it has an amount, and it will explain the amounts that you're going to receive as your COPE amount. So, that's the amount that's paid as part of your private pension. So, it will also tell you, you know, you'll see that you're not going to get the full amount of State Pension because it's, well, it's going to be paid by your employer or your pension scheme instead. So, it will give you a number. It won't explain, kind of, any numbers, the number of years that you were contracted out, but it will explain the amount that's going to be paid through that.

Sarah Pennells: Yeah, okay, we'll go to a question from Alan next. So, Alan said, 'I retired at the age of 55, and I will be living off draw down income from my personal pension fund. I have a full National Insurance contribution record. Will I still need to pay National Insurance?' And Clare, we talked about this at the beginning about, you know, somebody builds up a contribution record of 35 years of National Insurance, and we often get questions about, 'Why am I being asked to pay National Insurance?' I mentioned about paying it until you get to State Pension age if you're working, and it's 'if you're working' that's the crucial bit, isn't it?

Clare Moffat: That's right, yes. So, when you start receiving pension income, you are taxed on it, but you pay income tax. Whereas, only if you're working or if you're self-employed that you'll pay National Insurance contributions. So, if you're not working, and you are just taking that drawdown pension income, then, although you will be paying income tax if you're over the personal allowance, you won't be paying National Insurance contributions.

Sarah Pennells: I'm going to mix up the questions a bit. I've just seen one here from Beatriz,  I hope I'm pronouncing your name, I'm probably not, I hope I'm pronouncing your name incorrectly. And again, just because it's one that we get asked often so it's good to clear up. 'Can you still claim the State Pension if you decide to keep working after retirement age?' And that's a really simple one, which is taking your State Pension and retiring are two different things. You do not have to do both at the same time. So, you can decide to carry on working, you can get your State Pension. Or you can, get your State Pension and, not retire. You don't have to retire in order to get your State Pension. I think the confusion comes because the shorthand for talking about State Pension age which is the correct take, turn for when you get your State Pension, people often talk about retirement age, don't they? And I think therefore people think, 'Well, I've got to retire,' but it's not the case.

Clare Moffat: And I think years ago it used to be that way because that always happened. But many people are working until they're older now, and we spoke about that for some people it's worth delaying taking your State Pension because you're still working and although the State Pension itself isn't, you don't pay tax on it, it still sits in your, you know, it's the first, kind of, portion of income and then any earnings income will sit on top of that. So, you could end up paying a lot more tax, so that's why some people do decide to delay taking it, but some people do decide to take their State Pension, but then maybe reduce their working hours. So, that in total, it could be their income remains about the same level, but they've reduced their working hours. So, that's often common, or you just decide I'll delay taking it for a year, two years, until you have actually stopped working.

Sarah Pennells: Well, I think you may have answered Charmain's question a bit, but I will give it to you anyway which is, 'If I reduce my hours at work when I'm aged 60 plus, will this affect my State Pension when I'm ready to claim it?'

Clare Moffat: So, I think it's not so much, you're still going to get your State Pension entitlement and that's the amount that, you know, you see on your forecast. But what it might affect is the amount of income tax that you pay. So, if you were working, and it was full-time hours and taking State Pension, you could be paying a lot more income tax. If you reduce your hours with your State Pension then that could be more tax efficient in, in a way. And that State Pension income is giving you that really solid, kind of, foundation, which means you don't actually have to work as many hours on top.

Sarah Pennells: Okay, now we've got a question from Julie which is also about contracting, well it's actually about opting out of SERPS rather, not contracting out. So, she said, 'When I worked for a previous company, they, they opted out of SERPS. So, does that mean I will be short on my National Insurance contribution or go to the HMRC website to give accurate years?' So, I'm maybe just reading this incorrectly, but anyway, does being opted out of service mean she will be short on her National Insurance record? So, this is what we talk about, yeah.

Clare Moffat: Yes, so this is when we talk about contracting it, there was a variety of different things. They were called different things over the years so this, kind of, additional State Pension that you can get. And contracting out of that, whichever they were, SERPS, S2P, Graduated State Pension, they were all, kind of, an extra part. That's when you and your employer paid less National Insurance. You were contracted out and that's because your employer then had a promise to pay you a certain amount in retirement. So, yes that's, kind of, when we were talking about that. It's not so much you were short in your National Insurance contribution, it just means that DWP isn't going to be paying the full amount of State Pension because some of that, that COPE amount, and that's shown in your pension forecast is going to be paid by your employer or the pension scheme.

Sarah Pennells: Now, you mentioned SERPS and the state second pension. I don't think we mentioned it at the beginning of the webinar, we will be testing everybody on all the terms they've heard,

Clare Moffat: Lots of jargon.

Sarah Pennells: So, hope you've been paying attention. Anyway, right, we've got a question from Gillian saying, 'Is income from a private pension deducted from the amount of State Pension you can claim?'

Clare Moffat: No, so your State Pension is your State Pension. What can happen is it could impact other benefits I suppose and that's, maybe, we can have a think about that as well. But, so you have an entitlement if you've built up money in, in a pension scheme with your workplace, for example. You'll have that amount of income, and however you want to take that. But your State Pension is your State Pension and that is, you know, it's based on your National Insurance record, there's nothing deducted from it. I think the only thing is to, kind of, say about again about the pension credit. You know, that for, for some people, who are, kind of, closer to that limit, you know, it's actually, they might have an impact that they might not be able to claim pension credit, for example.

Sarah Pennells: Yeah, and it is a really useful benefit. If, if you are in the situation where you could claim that benefit, and we know that lots of people miss out on it. And because I mentioned at the start, it means you can apply for other benefits. It's called a gateway benefit, and it automatically means you can apply for other help, which is why it can be so valuable. I think we, we've got one last poll, but before we go to that just maybe one last question which is, from Anne. 'Does being off work with children give you credit on the State Pension?' So, Clare, we talked about this, kind of, right at the beginning, but I think it's really important to recap because this is a myth we hear so often that, you know if you're off with children, then that's going to really affect your State Pension. So, just recap on that again for us.

Clare Moffat: So, you get National Insurance credits if you're a stay at home parent or guardian, you're looking after children and that normally until each child is twelve. So, you kind of twelve with your first child. You might have a gap, you know, kind of, maybe there's another child born. The twelve years will start when the second child is born again. But you will get National Insurance credits for all of that time. But if say you only had one child, and you didn't go back to work for twenty years, you would have a gap then. You would have a gap of eight years at that point. So, you get National Insurance credits for the first twelve years, but after that, then you would have a gap if you weren't working. But, you know, I think even now people do return to work part-time, or maybe full time at that point in time, but that's the only time that you would be, kind of, missing yours is if you stayed off work longer.

Sarah Pennells: Okay, alright, well I think that's probably the last question that we are able to take because I want to leave time for our last poll. So, our last poll is what would you like to see from us in terms of future webinars? We're really keen to make sure that the webinars we do are subjects that you're interested in, and you want to hear about, so please vote in our last poll.

Clare Moffat: Okay, the numbers are still moving about a bit, but I think, that by, yeah, about 55% of people, how much do I need for my retirement. So, that's interesting I think, and it's something that we hear a lot, isn't it that people want to know actually, 'Well, I want to have a certain retirement, how much do I need to fund that?'

Sarah Pennells: And it's such a good, as you say, it's a question we get so often because, you know, your retirement could be twenty years or 25 years, even longer if you have a long life. And actually, understanding how much you need and the kind of lifestyle you want. That's really fundamental, so definitely one we'll pick up. But we've also had quite a few. One in four people voted for pension transfers. One in five for a guide to pensions for beginners and also a 6%, I'm trying to read and speak at the same time. Always tricky. How to manage everyday finances. So, we will definitely come back to those. Thank you very much. So, that's all we have time for. We will be sharing a link of the recording of the webinar in the next few days, but in the meantime, thanks very much for joining us today, thank you.

Clare Moffat: Thank you.