(PRWEB UK) 5 November 2014
Nearly one in five (18 per cent) adults do not believe they will qualify for the full flat rate State Pension of £155 a week, which is due to come into effect on 6 April 2016, according to new research from Prudential (1).
Twenty one per cent of women believe they will miss out, compared with 14 per cent of men. This gender difference means that women think they are less likely to make the equivalent of the 35 years of National Insurance (NI) contributions needed to qualify.
Nearly half (49 per cent) of those who think they will miss out believe they will do so as a result of taking career breaks to raise children, although 20 per cent say they will not meet the target due to long-term illness.
However, for those who fail to clock-up the necessary 35 years in employment, additional years can be bought in voluntary contributions, or can be credited to those who receive Jobseeker’s Allowance or Employment and Support Allowance. People who claim child benefit for children under the age of 12, those who are unable to work through illness, and carers can also claim added years (2).
The research found that only 14 per cent of adults who believe they won’t reach 35 years in employment will make voluntary additional NI contributions, to ensure they qualify for the full State Pension.
Prudential's research was conducted among people born after 6 April 1950 and found that 27 per cent of those aged 55-plus were not aware of the State Pension reforms. This figure rises to 53 per cent, among the total adult population. There is also confusion around how much the new State Pension will be worth. On average, those surveyed believe it will be worth £125 a week, compared with the actual £155 a week, although one in nine (11 per cent) thought it would be £170 a week.
Tim Fassam, pensions policy expert at Prudential, said: "The launch of the flat rate State Pension in April 2016 is designed, in part, to make it easier for people to understand how much they will receive from the State, in turn enabling them to better plan for their retirements.
"But inevitably, due to the changes to the rules on eligibility, there will still be differences in what people receive. It is therefore important for everyone to obtain all the relevant information so that they can make an informed decision, if they need to make up additional qualifying years through working longer or making voluntary contributions.
"However, people should not rely on the State Pension alone. Saving as much as possible as early as possible in your working life, and seeking professional financial advice in the run-up to retirement, will help to ensure that you are best placed to make the most of your savings when you’re ready to stop working."
Prudential’s research found that more than two thirds (67 per cent) of adults expect to have worked for at least 35 years by the time they retire. Women believe they are less likely than men to reach this milestone, with 61 per cent believing they will reach 35 years, compared with 74 per cent of men.
Further information about the State Pension and making voluntary NI contributions can be found on the Money Advice Service (MAS), The Pensions Advice Service (TPAS), and the Department of Work and Pensions (DWP) websites.
Jo Field 020 7004 8078 jo.field(at)prudential(dot)co(dot)uk
Celine Plum 020 7004 8009 celine.plum(at)prudential(dot)co(dot)uk
Follow us on Twitter: @PruUKPress
Radio interviews via ISDN or iPhone apps can be arranged on request.
Notes to editors
1. Research conducted between 30 September and 3 October 2014 among a sample of 1,044 UK adults aged 18+ born after 6 April 1950 by Consumer Intelligence.com
2. Most people retiring after 6 April 2016 will need to have made NI contributions for a total of 35 years before retirement to receive the full State Pension, but these do not need to be paid in consecutive years.
NI contributions are paid by those earning more than £153 per week, or those who are self-employed and pay NI contributions.
Those who have not been earning this amount can also receive equivalent credits if they:
- Can’t work because of illness or disability
- Are a carer
- Are receiving jobseekers allowance or employment and support allowance
- Or are claiming child benefit for a child under 12
People can also buy extra years of NI contributions if they do not reach the 35 year threshold.