State pension warning: ‘Billions unclaimed’ as experts warn ‘you could be missing out’ | Personal Finance | Finance

The Government could be preparing a drastic change in its economic policy as a result of the pandemic, hiking taxes and taking precautionary measures to try and lift the UK out of recession. But a recent report outlines that the Treasury is holding up to £5billion in unpaid state pensions. This figure would be accurate if there are as little as 250,000 claimants who have missed out on payouts at any time, as highlighted by consultancy Lane Clark & Peacock. The analysis indicated that the unpaid sums originate from national insurance credits, designed to protect rights to the state pension during periods where they are out of paid work.

With a large sum of people potentially missing out on money they are entitled to, Sir Steve Webb, a former pensions minister, called on the Government to ensure people take what they are entitled to.

He said: “If we want to reduce the gender pension gap, we need to raise awareness of these important credits.”

Lane Clark and Peacock estimate that just one year of missed payment could amount to £20,000 in state pension payments over the course of a 20-year retirement, equal to £5 per week.

However, to receive a state pension, claimants would need at least 10 years on their national insurance record.

To be eligible for the full new state pension you need 35 years on your record.

Those who are unable to make contributions due to being a carer, disability or lack of work can receive a year of credits if they have partaken in “valuable activity”, but often have to make the claim themselves.

Therefore, many people who could be entitled will be parents, carers or those on sick leave.

READ MORE: Rishi Sunak faces ‘huge rebellion’ for ‘perverse tax rise plan’

Mr Webb of Lane Clark and Peacock described this as a “big challenge” but said it is “far from a King’s ransom”.

Ian Browne, pensions expert at Quilter, expressed concern however, saying while the rise was good for pensioners, it meant pain for workers in the public sector.

He said: “It will be hard to ignore the fact that giving retirees an inflation-busting income rise, while simultaneously announcing a pay freeze on many public sector workers, is a difficult message.”

Source link

Related posts

Leave a Comment