UK Pensions Checklist: Introduction

Introduction

I don’t know about you, but sometimes I just want someone to tell me exactly what steps to take to get a job done. You know – do this first, then that, then that and finally this, and the outcome is a given. All the thinking taken away.

A few years ago I read a book called The Checklist Manifesto by Atul Gawande, which made an extremely compelling case for checklists in all walks of life, from medicine to construction to accountancy, and that is the inspiration for the podcast season these blogs are based on.

Each episode was a collection of checklists with a corresponding downloadable printable checklist so you can work through it and make serious progress.

Check Your State Pension

The bedrock of most people’s retirement will be the state pension. I don’t have a lot of time for people who say that it won’t be around in future – I see no reason why it won’t be. I do understand why people want to plan for a retirement without depending on the state pension. That makes sense, because then, whatever the state pension is at the time will be gravy on top of their own provision.

Most folks though will be reliant on the state pension in part, and for a couple, the new state pension is just shy of £18,500 a year, or a little over £1,500 per month. Half that for a single person obviously. Now, I wouldn’t want to be entirely dependent on that, but it’s really not a bad start as a baseline income, you’ve got to admit.

But how much will you get? Well, the easiest way to check this is to ask the source, HM Government, via the relevant page on the gov.uk website. If you haven’t already, you’ll have to set up an account, but that’s pretty quick and easy. Once done, the page will simply tell you what you’re on track to receive.

You need 35 years of full National Insurance contributions to get a full state pension, and the page will tell you how many years you have to date and how many years you need to make up.

When I checked mine, and it said that I’m on track for the full state pension of £175.20 per week, but right now I am seven years short. Given that I’m 46, and I won’t get my state pension till my 67^th birthday, there’s a good chance I’ll make up seven years of NI contributions in the next 21 years.

There may also be information on your record about something called COPE, which stands for Contracted Out Pension Equivalent. Back in the day you could redirect a little bit of your national insurance contribution into a personal pension or an occupational pension.

If you did this, then you may get less than the full state pension, but the theory is that to some degree that shortfall will be made up in the other pensions you have. Whether that’s borne out in practice of course, is still to be seen.

The government site should make it pretty clear what you’ll get from that source, though, and that’s the first thing we need to have ticked off on our checklist.

Gather all Your Statements

Now we need to really understand what you have outside of the state pension.

Many of us have amassed different pensions from different employments over the years, and often these are neglected. When we leave one company we may leave the pension in-situ, and never look at it again. This is clearly not an intentional way to do things.

So it’s time to do some thinking back. Trace the timeline of your career and all the pensions you have been a member of over that time. Assuming you’ve always told your schemes whenever you’ve moved house, then you should have annual statement for every pension you’ve ever had.

If you don’t have a statement issued in the past year, you need to reach out to the provider of the pension and get one. You don’t want any gaps in your pension history; don’t leave money on the table. Make sure you’ve got a recent statement for every single pension.