HM Revenue and Customs (HMRC) is urging millions of people to check their State Pension forecast to find out how much they could receive in retirement and whether they may be able to boost their future payments. Recent research published last month found almost seven million adults across the UK have never checked their State Pension forecast.
Survey findings
HMRC's survey of more than 5,200 people found one in eight adults - 12.5 per cent - have never checked their State Pension forecast, equivalent to around 6.9 million people.
People aged between 45 and 54 were more likely than any other age group to have never checked their forecast, despite being at an important stage for retirement planning.
How to check
HMRC is encouraging people to use its free app to check their forecast and look for potential gaps in their National Insurance record which could affect how much State Pension they eventually receive. Eligible people may also be able to make voluntary National Insurance contributions to fill gaps and increase their future entitlement.
Myrtle Lloyd, HMRC's Chief Customer Officer, said: “It's never too early, or too late, to check your State Pension forecast. Checking your forecast on the HMRC app takes just a few minutes but can make a real difference to how prepared you feel for the future.
“Whether retirement is decades away or just around the corner, I'd encourage everyone to check their forecast and see if there's anything they can do now to boost their entitlement later.”
The HMRC app allows people to check their State Pension forecast and identify potential gaps in their National Insurance record. People who are eligible to make voluntary National Insurance contributions can also use the service to top up their record.
The app provides access to other information including tax codes, Pay As You Earn (PAYE) details, employment history and Self Assessment records. HMRC is promoting the service as part of Pension Awareness Week, which runs from September 15 to 18.
Why people have not checked
HMRC's research also looked at why people put off checking their retirement finances.
More than a quarter (26%) said retirement still felt too far away to think about, while 24 per cent were concerned about losing track of pension pots from previous jobs. One in five (20%) had concerns about how career breaks could affect their entitlement.
Nearly one in 10 (9.5%) said they simply did not know how to check their State Pension, while five per cent thought the process would be too complicated. Some 17 per cent said they only think about their pension at major financial points, such as the beginning of a new tax year.
However, almost a third of people surveyed have checked their State Pension using the HMRC app or online.
Why checking your National Insurance record matters
The amount of State Pension someone receives depends on their National Insurance record and individual circumstances.
Checking a State Pension forecast can therefore show not only how much someone is currently on track to receive, but also whether there are gaps in their record which could affect their eventual entitlement.
Rob Hillock, Head of Personal Financial Planning at Broadstone, said: “Understanding your State Pension entitlement is one of the fundamental building blocks of retirement planning, so it is concerning that millions of people remain in the dark about what they are likely to receive.
“Checking your forecast can highlight any gaps in your National Insurance record while there may still be time to address them.”
He added that knowing the figure could help people understand how their State Pension will combine with workplace pensions, private savings and investments. Mr Hillock said: “For those in their 40s and 50s in particular, there is still valuable time to make adjustments, but the earlier people understand where they stand, the more options they are likely to have.”
Can you boost your State Pension?
Gaps in your National Insurance record do not automatically mean someone should pay voluntary contributions. Whether making additional contributions will increase a person's State Pension depends on their individual National Insurance history and circumstances.
People should therefore check their State Pension forecast and National Insurance record before making voluntary payments. The HMRC app can show potential gaps and, where someone is eligible, allow them to make voluntary contributions.
People can also use the UK Government's online State Pension forecast service to find out how much State Pension they could receive, when they can get it and whether they may be able to increase it.
Tax and your State Pension
HMRC is also directing people towards its Tax Confident service during Pension Awareness Week. The online resource explains some of the tax issues people may encounter as they approach or enter retirement.
This includes information about the State Pension and taxable income, paying tax while continuing to work and receive a pension, and tax considerations involving savings, investments and inheritance. The State Pension is taxable, although it is normally paid without tax being deducted at source.
HMRC's State Pension forecast and other retirement information can be accessed through the free HMRC app.
