State Pensions The Reality - Hot Topics Q&A

Q. My current adviser has played down the value of any state pensions my wife and I are likely to build up, suggesting that these benefits are questionable and we should buy more personal pensions. My wife did not work for many years, bringing up our two children who have now left university and are independent.

She now plans to do some part time work to 60.  We are both approaching 50, and would value an impartial view.

A. There certainly has been a lot of fear and confusion in recent years as to what would the future of state pensions will be. However, this has been tackled by the new White Paper on state pension reform which has made massive strides to provide a “lasting consensus for the next 40    years”. 

Although, in theory, things could once again change, these changes are likely to become law in the next few years. The good news for you both is that any benefits you have built up will be accessible by you at age 65, whereas people under age 47 will have to wait until ages 66 or 67.

Also, it is planned to give national earnings increases to pensions by 2012 (if affordable) rather than retail price inflation. You mention the fact that your wife was looking after children for many years. She should have been awarded credits here called home responsibility protection.

We would suggest you visit the site below to obtain your pension projections so that you will know the value of your benefits to date and also projected to retirement age. For many of our clients (especially couples), these amounts can be several hundred pounds a month. Once you have this information, then you can make a more informed decision on buying more personal pension or not.

   http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp 

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