The majority of students don’t know or understand what a State Pension is, nor do they understand or know why it matters to them – and why should you? I mean, you’re far too young to worry about stuff like that, right?
Well, yes and no – you shouldn’t worry about it, but you most definitely should be aware of it because between now and your mid-to-late 60s, you’ll be contributing to your State Pension.
When you’re older, you’ll be able to receive a State Pension as a regular payment from the government – it is paid to persons after a certain age (your State Pension age). Once you reach your State Pension age you can start to claim your money – but you don’t have to retire or claim your State Pension as soon as you reach State Pension age, you can wait until you’re ready or decide to stop working.
You can check what your State Pension age will be, and in which year you’ll reach that qualifying age, on the GOV.UK website. At this current time, I will be 68 when I can qualify - but be aware that your State Pension age may change in the future. You can also get a State Pension statement online with GOV.UK Verify.
People don’t always get the same amount because what you receive depends on your National Insurance record – this is how much National Insurance (NI) you have contributed over the years, which is normally automatically deducted from your gross pay (what you earn, before tax).
Currently the State Pension system is being changed. With the old State Pension, the most you used to receive was £119.30 per week. With the new State Pension, this has now increased to £155.65 per week. However, you should be aware that you might have to pay tax on your State Pension too (I talk about taxes in A Student's Guide to Taxes).
Your state pension will not be given to you automatically - about 4 months before you reach the state pension age you should get a letter, and this letter will tell you what to do and how to claim.
Some of you may be wondering “Can I still work after I’ve reach the State Pension age?” and the answer is yes, but you will no longer pay NI (so no longer contributing to your State Pension), but you’ll be able to request flexible working hours. If you choose to continue working, you can claim your State Pension at the same time, or you can defer it to a later time, which will increase the weekly amount you will receive.
Now you know a little bit of what it’s about, you’re probably wondering “Why is this relevant to me now - it’s so far away?” It’s relevant because after you leave university, you’ll be (hopefully) in a good job where you’re earning enough to start paying taxes and NI (when you earn more than £155 per week).
|How much NI will I pay?||Rate for 2016 - 2017|
|Earnings between £155 - £827 per week||12%|
|Additional earnings above £827 per week||2%|
Also, it’s good to start thinking about it so you can start putting some extra money aside for your pension as soon as you are able to - although you can claim your State Pension it’s always a good idea to have some extra savings set aside just in case something happens and your State Pension doesn’t cover it.
Also, when you start working, your employer will automatically enrol you into a Workplace Pension, which is another way or squirreling a little extra away for retirement.
Checking your State Pension details, just like checking your driving licence information, is a service available through GOV.UK Verify. To use Verify, you’ll need to register with one of the certified identity providers, like Citizensafe and have your identity verified - registration take around 10 minutes and you’ll only need to do this one, after which all you’ll need to do is sign in to access all GOV.UK Verify service.
When you create an with one of the certified companies, they’ll need to ask you a few questions about your financial history and may need to perform other security checks to confirm that you are who you say you are. I know it sounds scary but it’s secure, safe and a lot faster than the current government process! After you’ve had your identity checked, you’ll have access all the online Government services in one place, whenever you need to.
GOV.UK Verify is the new way to prove who you are online, giving you safer, simpler and faster access to government services. It has been designed and built by Government Digital Services (GDS). GDS have partnered with several identity assurance companies to verify your identity: CitizenSafe is one of these. Some of these companies you may have heard of, others not (like CitizenSafe), but that doesn’t make them any less trustworthy to verify who you are.
I’m sure you’d probably choose the companies that you are most familiar with, but I would choose CitizenSafe. This is because they are a professional and global identification company from GB Group and are 100% committed to the online verification service (they’ve been doing it since 2003!). CitizenSafe make the verification process simple and easy to use, and they will only ever ask for things that are relevant to verifying your identy. They will only share the minimum necessary information from you with the government service you need, and no one else! On top of that, they use the most up to date technology and security to ensure your privacy!
So when you’re next using the online government services, keep in mind CitizenSafe - It’s all there in the name. Keeping citizens safe.