Seven things to know about your pensions including how to find missing cash

EVEN if it's a long time until you're due to hit retirement age, Brits should saving now to make sure they're not worse off in later years.

If you're putting off thinking about your pension, here are seven things you need to know to get your head around saving for your future.

Your pension is the money you’ll live off when you stop working.

But Brits were warned earlier this year that the state pension "won't be enough" to get by financially.

It means boosting your pension pot is important to make sure you're covered later in life.

There are different types of pensions you can save into.

The state pension is a regular payment most people claim when they reach a certain age in later life.

It's different to your workplace or a private pension, with the time you can apply for it depending on when you were born.

We explain all you need to know about pensions below.

What kinds of pensions are there?

There are different types of pensions you can claim in later life.

A state pension is paid to by the government when you reach retirement age, with the amount you get based on your National Insurance contributions that you've built up in your working life.

The state pension is currently split into two systems, depending on how old a person is and when they retired.

Men born on or after April 6, 1951, or women born on or after April 6, 1953, will be able to claim the new state pension.

For those who reached the state pension age before April 6, 2016, you’ll be getting the old state pension, known as the basic state pension.

If you retired before that date, then the basic state pension you'll be paid is £137.60 per week.

For everyone else, the full new state pension is £179.60 per week, but the actual money you get will depend on your National Insurance record.

As well as the state pension, there are personal pensions that you either save for yourself, or through your workplace.

The amount you get varies depending on how much you save.

Not everyone has a private pension and you can choose to opt out of your workplace pension.

It's best to check with your employer what options are available to you to help you save.

What is the triple lock?

The triple lock is a calculation used to determine how much the state pension rises by each year.

It was introduced by the coalition government in 2010 and sees pension payments increase in line with whichever of the following is highest:

  • Earnings – the average percentage growth in wages in Great Britain
  • Prices – the rising cost of living in the UK, as measured by the Consumer Prices Index (CPI)
  • 2.5%

Average wages are now the highest of the three – jumping 8.8% – because CPI inflation is currently at 2.4%.

This could see a big boost to pensioners' pockets – but the government is considering axing the triple lock for one year and introducing a smaller rise of 3% instead.

That means a pensioner claiming the full state pension of £179.60 would get an extra £5.40 – bringing the total to £185.

Someone who claims the old basic state pension of £137.60 would get a weekly boost of £4.15, or £141.75 a week.

An axe to the triple lock would follow calls from experts to ditch the scheme as it costs billions for the government to cover.

Sector leaders have urged the government to put the money towards paying off its mounting coronavirus bill.

How to track down missing pensions

It can be hard to keep track of where your pension pots are.

You can have many if you move jobs regularly – this is because companies have to auto-enrol staff onto a pension scheme so they can boost their retirement.

It could mean that you have a number of workplace pension pots – but around 1.6 million savers have lost track of where theirs are.

A new online tool, called a pensions dashboard, is expected to help workers track these savings – but it won't go live until 2025.

In the meantime, your employer should be able to tell you where your pension money is if you have been auto-enrolled onto a scheme.

There may be a website you can login to where you can view who manages your pension, how it is invested and alter your contributions.

Pensions providers are also supposed to send annual statements to scheme members so check old paperwork or emails.

Check online if a provider has merged or been sold to another company as that could mean someone else is in charge of your pension.

If you still can't find your lost pots, you can contact the Pension Tracing Service.

This is a free government service that lets you find your own workplace or personal pension scheme or someone else's if they give permission.

Claim back overpaid pension tax

If you dip into your pension pot before you retire, you could be slapped with charges.

You can start taking money from a personal or workplace pension from the age of 55.

Usually you can take the first 25% of your pension tax-free, and anything over that is taxed.

But when taking a lump sum you can be taxed at an emergency rate and end up paying more than you have to.

We revealed that HMRC has had to pay Brits £33million back this year because it taxed them too much for accessing their retirement cash.

Nearly 10,000 people overpaid in the first three months of the new tax year from April to June.

They got back £3,379 each on average from HMRC.

Anyone who overpays tax can get it back by claiming a refund from HMRC via a from online or with a paper one sent by post.

If you don't do this, you should get your money back automatically anyway -but you will have to wait until the end of the tax year.

The exact amount you can get back if you overpay depends on how much money you took from your pension, what other income you have (if any) and your tax rate.

How much do I need to save?

Relying on the state pension alone won't be enough to get by on in later life -so you'll need to put away some extra cash of your own.

Which? reckon that couples need to be putting £194 into their pension a month from age 20 to be able to have a comfortable pension.

That figure goes up to £253 a month for anyone over 30, and if you start as late as 50 you need to be saving a staggering £581 a month to be able to have a £26,000 a year income when you retire.

These figures are assuming that your employer pays his or her part of your pension contributions.

Claim pension credit

Over a million retirees are missing out on thousands of pounds a month in unclaimed pension credits.

Pension Credit gives you extra money to help with your living costs if you’re over the State Pension age and on a low income.

Typically, it is worth around £3,000 a year on average, and you can get extra help if you're a carer, disabled, or responsible for a child.

Plus, you can get other benefits by applying for pension credit – these are:

  • Housing Benefit if you rent the property you live in
  • Support if you own the property you live in
  • Council Tax Reductions
  • A free TV licence if you’re aged 75 or over
  • Help with NHS prescriptions, dental treatment, glasses and free transport costs for hospital appointments
  • Help with your heating costs including cold weather payments

You must live in England, Scotland or Wales to be eligible for Pension Credit and you must have reached State Pension age.

However, what you get depends on your circumstances – find out if you can claim on the's website.

Boost your pension by £2,675

If you're a grandparent and looking after your grandchildren, you could get an extra £2,675 annual boost to your state pension.

Grandparents can claim Specified Adult Childcare Credits that top up their National Insurance contributions if they are caring for their grandkids.

They count as a national insurance (NI) credit for those who don't otherwise work.

This is important because you need at least 10 years' worth of NI credits to qualify for the state pension, and at least 35 years' worth to get the full £179.60 a week.

To put in a claim, you will need to complete an online application form.

You need to provide your personal details, as well as information about the child and the periods of care you provided.

As part of the application process you also need to input the personal details of the child's parent or the Child Benefit recipient.

Finally, both the applicant and the parent must both sign the form.

Specified Adult Childcare credits can be awarded retrospectively to 6 April 2011 at the earliest.

But you must have been under the state pension age of 66 when you cared for the child.

The government will not accept applications for any tax year until the following October at the earliest.

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