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Planning Retirement Online

Retirement Benefits

Introduction

There are very few benefits that are specifically related to retirement; most of them are linked to age, which may or may not be linked to retirement. Indeed, now that there is no such thing as a default retirement age (when employers used to be able to retire employees purely because they had reached a certain age) it would be difficult to relate benefits to retirement.

The one exception is, of course, pensions. Many people will receive a pension from their employer when they retire and we will all get the state pension. However, even with pensions, the link between receiving them and retirement is, in many cases, no longer present. We are now allowed to receive our company pension and then carry on working and, although many people call the age at which they receive their state pension, 'retirement age', it needn't necessarily be. We can retire before or after we start to get the state pension; there are no rules against that.

However, the benefits that we are concerned with are related to an age at which many people will retire or will already have retired, so it is quite legitimate to call them 'Retirement Benefits'. This page is an introduction to these retirement benefits with links to further information about them.

Pensions

Occupational Pensions

Related Retirement Guides

There are two kinds of occupational pension: Defined Benefit, based on the employee's final salary (or, increasingly now, their average salary over the years that they have been paying into the scheme) and the number of years’ service that he/she has, and Defined Contribution, based on monthly contributions paid by both employee and employer. With the latter, until April 2015, the employee almost always used to buy an annuity with the money that they have saved. From April 2015, when ‘Pension Freedom’ started, it is now possible to access a Defined Contribution pension pot in many different ways. So, whilst some people might still buy an annuity, many others will choose a different route.

For more information on occupational pensions go to the page on this subject in our

Guide to Retirement Pensions.

Personal Pensions

If you have been paying into a personal pension, it is very probable that you will take it when you retire and this will become a retirement benefit for you. Until April 2015, you would probably have bought an annuity with the fund that you built up, which would provide you with a regular income. However, after that date, you are now able to use your pension fund in different ways in exactly the same way as for a Defined Contribution Scheme (see above). So you can still purchase an annuity but you can also draw out agreed regular amounts (called 'Drawdown') or you can take lump sums out of it as and when you wish. This needs careful thought and you should think carefully about taking some proper financial advice.

If you do choose to buy an annuity, there are many different kinds and the situation can be quite complicated. Also, you do not have to buy an annuity from the organisation to which you have been paying your contributions; there is something called the Open Market Option' which means that you can shop around and get the best deal (or retirement benefit) that you can find.

You will need to talk to the organisation to which you have been paying your contributions and it may be beneficial to talk to an Independent Financial Advisor (IFA). If you haven't already got an IFA and there is no-one who can recommend one to you, go to www.unbiased.co.uk to find one in your area.

For more information on personal pensions and links to other sources of information, go to our Guide to Retirement Pensions.

State Pension

To receive the full basic state pension, as a retirement benefit, we must have paid a minimum of 35 years National Insurance contributions or have been receiving Child Benefit or other benefits such as Carer's Allowance. For more details on this, go to www.gov.uk. On April 2016, State Second Pension (S2P) was stopped and we now have a single-tier state pension. However, people who have been in the old scheme and who have either been contracted in our out of S2P (formerly SERPS) there are transitional arrangements and they will get either more or less than the single-tier payment (£155.65 in 206/17). For more details on this, go to https://www.gov.uk/new-state-pension/overview


The state pension age for men is 65 but, between 2018 and 2020 will rise to 66. The age for women is already rising and will go to 65 by April 2018 and 66 by October 2020. However, you may defer it if you wish so that you receive more when you do claim it. To find out more about exactly when you will receive the state pension and about deferring it if you wish, go to https://www.gov.uk/new-state-pension/overview.


For a more comprehensive overview of the state pension, go to the page on state pensions in our Guide to Retirement Pensions.

Other State Retirement Benefits

Once you are at state pension age there may be other retirement benefits to which you are entitled.

Pension Credit

If your income in retirement, including savings, is below a certain level then you may be entitled to Pension Credit, which is designed to bring everyone's income up to a basic level. Guarantee Credit tops up your weekly income if it's below £155.60 (for single people) or £237.55 (for couples). Savings Credit is an extra payment for people who saved some money towards their retirement, eg a pension. You may not be eligible for savings credit if you reach State Pension age on or after 6 April 2016. Go to https://www.gov.uk/pension-credit for more information and go to: https://www.gov.uk/pension-credit-calculator to see how much you might be entitled to.

Free Prescriptions and Sight Tests

Once we reach the age of 60 we are entitled to free prescriptions and free eye sight tests. For more information visit the NHS webiste.

Winter Fuel Payment

Once you get to the women's state pension age, you are entitled to the winter fuel payment. That means for men, they can receive it once they reach the pension age for a woman born on the same day. You can see when this is by going to the State Pension Age Calculator on .gov.uk. For 2016/17, the rate is £200 per household if you are under 80 and £300 for the over 80s. If there are two people in the household who qualify, the allowance is shared between both. It is paid in November and December and to receive it this year (2016/2017) you have to have been born on or before 5 July 1953. For more information, click here.

The first year that someone in the household becomes entitled to Winter Fuel Payment, we have to apply for it. After that, it should come automatically as a retirement benefit.

Subsidised Transport

You can travel for free on local buses once you reach state pension age. If you live in England, the bus pass gives you free local bus travel anywhere in England between 9.30am and 11pm on weekdays and all day at weekends and public holidays. The situation is slightly different for Wales, Scotland and Northern Ireland. If you live in these countries, go to this page and click the relevant link. If you live in London, you get the 'Freedom Pass' once you have reached the state pension age for women, so go to the Freedom Pass website for more details. If you live elsewhere in England, click here to find out more. We apply for the bus pass to our local council.

Once you get to the age of 60 you are also entitled to the Senior Railcard. For an annual charge (£30 for 2015/16) you get one-third off fares across the whole of Britain. A three-year rail card costs £70, so the annual rate is even cheaper. You can buy it online or at the booking office of railway stations. For more details and to buy one online, go to www.senior-railcard.co.uk.

Other State Retirement Benefits

For those people on low incomes there may be other benefits available, such as the cold weather payment and help from the social fund. For a list of these and links to more details, go to this page on direct.gov.uk. Also have a look at the laterlife Guide to Concessions and Discounts.

Private Sector Benefits

There is a whole range of retirement benefits that are available in the private sector once we reach the qualifying age. This age may be 60, it may be the state pension age for women or it may be 65; it depends on the organisation that is making the discount.

It would be impossible to list them all here because they range from local pubs and hairdressers to attractions and exhibitions, sporting events and large stores (B & Q has its diamond card that gives the over-60s10% off on Wednesdays, for example). However, for a more comprehensive explanation of these discounts, go to the laterlife Guide to Concessions and Discounts. What everyone over 60 should do is to research their local area to see which shops and organisations are offering age-related discounts and then take advantage of them.

Similarly, if you are visiting somewhere, do whatever research you can, using the Internet, for example, so that you can take advantage of the available retirement benefits whilst you are there.

Summary

There are many 'retirement benefits' that are available to us, both in the public and private sectors. However, remember that, for the vast majority of them we don't actually have to be retired - they are age-related rather than retirement related. So make sure that you are aware of them, apply for them if applicable and take advantage of all the retirement benefits that are available to you.

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This Guide is written by Retirement Specialist Dave Sinclair supported by members of the LaterLife team. As well as writing on retirement matters Dave is Training Director at LaterLife and responsible for the content and continuous improvement of LaterLife's Retirement Courses.
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