How to make sure you claim all your pension entitlements

It’s important to make sure you get the income that you are due when you retire, says Ruth Jackson-Kirby.

Old lady with a laptop © Getty Images
A few small extras could add up
(Image credit: © Getty Images)

As retirement approaches, you may feel like there is little left to do to increase your pension. You’ve saved for years and now it is time to turn your pension fund into income. But there are a few tips that might be able to increase how much you get.

If you’ve already retired and have a final-salary company pension, be aware that you might be due compensation for the way that your scheme calculated benefits for members who were contracted out of the state earnings related pension scheme (Serps) between 1990 and 1997.

In the next year, more than a million pensioners will start to get back payments under a government scheme to “redress decades of retirement unfairness”, says Jessica Beard in The Daily Telegraph. In 2018, many schemes were told to change how they increase the value of the guaranteed minimum pension (which they must provide to members who were contracted out) before and after retirement. The change was due to old rules that treated men and women differently, but whether you might gain depends on the specific scheme, how much you earned, when you worked and when you retired rather than just your sex. The average payment is likely to be around £1,000, according to XPS Pensions, a consultancy, but some people could receive up to £25,000.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Make sure you are on track to get the maximum state pension. This requires you to have made national insurance contributions (NICs) for 35 years. If you have not accrued enough years, you may want to pay voluntary NICs to fill the gaps. “But before you boost your state pension, double-check it’s worthwhile,” says Amy Roberts on MoneySavingExpert. “The key that defines whether it’s worth bothering is how many NI years you already have.”

Apply for a pension forecast to find out how much you can claim and when you can start claiming. It currently costs £795 to buy a year (£15.30 per week) and this will boost your pension by about £260, so it will take three years to recoup. The self-employed or those working abroad can pay Class 2 NICs (£3.05 per week).

Another way to boost your state pension is to defer taking it when you hit state pension age, says Jess Sheldon in the Daily Express. For every nine weeks you defer, your state pension will now increase by 1% (working out to 5.8% per year). So if you delayed for a year, you would initially miss out on around £9,000. When you start claiming it, you would get £185.36 a week, so it would take 17 years to break even.

But “it is also a little-known fact that those already in receipt of state pension can suspend payments and then earn the same increases in the weekly pension”, Kay Ingram of adviser LEBC tells the paper. This is more appealing to anyone who reached state pension age before 6 April 2016, because their pension would increase by 1% for every five weeks deferred (10.4% per year) and they have an option to take the increase as a lump sum.

Finally, make sure you have no forgotten pensions, says Tanya Jefferies on This is Money. The Pension Tracing Service can help you find any private or workplace pensions in your name. The Association of British Insurers (ABI) estimates that there are more than 1.6 million lost pensions worth an estimated £13,000 each.

Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.