State pension warning as error could leave Britons with £50,000 less than expected

State pension: Expert discusses possible ‘significant increase’

State Pension payments are overseen by the Department for Work and Pensions (DWP) and given to Britons of an eligible age who have built up National Insurance contributions throughout their lifetime. It is important to note, however, the Government states a person may receive less than the full new state pension if they were contracted out before April 6, 2016. While state pension payments are clearly very important to many, a simple mistake could mean they are left with less for retirement.

Research from consumer website Which? showed a significant number of Britons are currently overestimating the amount they are set to receive from the state pension.

The organisation found some three in 10 people asked are overestimating their future state pension payments.

Some individuals even overestimated their entitlement by nearly £50,000 – which could then create a nasty shock later down the line when it comes to retirement.

The full new state pension currently stands at £175.20 per week, but is set to rise again this year due to the Triple Lock Mechanism.

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Despite this, only 29 percent of those asked knew or were able to guess the average amount people receive from the state pension is around £150 a week.

In addition, four percent of those asked believed the state pension is worth £200 a week – calculated at £10,400 per year as an average.

This means an overestimation of as much as £49,400 when taking into account the average length of retirement, from state pension age at 66 to age 85.

The Which? survey questioned some 2,000 people about the pension system in the UK and how state pension works.

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It called upon the Government to implement further education about the state pension as well as a ‘pension dashboard’ allowing Britons to see all their pensions in one place.

Of course, having less than expected for retirement could create issues down the line.

For many Britons, the state pension is a key source of income, helping them to cover the cost of day-to-day expenses, but also to reach larger retirement goals.

Therefore, it is important to fully understand one’s state pension entitlement.

To get any state pension at all under the new scheme, Britons will usually need at least 10 qualifying years on their National Insurance record.

For the full new state pension sum, people will usually need 35 qualifying years in their National Insurance record.

However, there is no need for Britons to remain in the dark about their state pension entitlement.

The Government has developed a state pension forecast tool, designed to help in the understanding of the state pension.

The online service can be used to help people find out how much they could receive from the state pension, when they can get it, and how the sum can be increased, if possible.

Britons may be able to increase their state pension sum by paying voluntary National Insurance contributions, for instance.

It is important to note, though, that this action does not always increase a state pension sum and so advice should generally be taken before doing so.

The state pension forecast is likely to provide Britons with a bigger picture when it comes to their retirement.

The online service cannot be used by those who are already in receipt of the state pension, or individuals who have deferred claiming it. 

If someone does not wish to use the online service, which is the quickest way to find out information, they can send an application form by post, or call the Future Pension Centre who will post the forecast out. 

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