2024 saw many people becoming a lot more conscious of their finances after Rachel Reeves’ autumn budget tightened purse strings across the country. For those heading into retirement, it also revealed a fair few miscommunications, misconceptions and misunderstandings around pensions.
Helen Morrissey, head of retirement at Hargreaves Lansdown delved into the 4 most commonly asked pension questions of 2024 starting with how much the state pension is worth. It all depends on when you were born and when you retired as this will decide whether you’re on the old or new state pension system. The new state pension increases every April but currently provides £221.20 per while the full basic state pension offers £169.50.
Outside of the state pension, many people were trying to figure out this year “how much pension will I get” from their personal or workplace pots. Helen pointed out this vastly differs between people and there are a range of online pension calculators that can help you figure out how much you’d need for a happy retirement versus how much you’ll have if you continue saving and investing at your current rate.
However, these calculators come with a caveat as the expert warned: “Remember though, this will just be an example figure and could be different to how much you actually get.” Many people were also seemingly taking stock of their entire pension outlook this year as “how to find an old pension” was also one of the most common queries.
It’s surprisingly easy to lose pension pots, particularly if you’re jumping between jobs due to automatic enrolment. However, finding and collecting these pots could significantly boost your retirement and claim back your hard-earned money. Helen advised: “If you’ve lost track of a pension, contact the government’s Pension Tracing Service. All you need is either the name of your employer or your pension provider.”
Finally, after the Chancellor revealed certain pensions will no longer be free of inheritance tax liability, many people began to question “what happens to my pension when I die?” You can choose which beneficiary will receive any unused pension pots when you die which can be confirmed with your pension provider and in your will.
The rest is usually decided by the type of pension you have and how you treat it in life. For example, if you didn’t touch your pension pot, were in a drawdown or made lump sum withdrawals your heir can usually choose whether they want the cash to be paid directly into their bank account or to simply convert the pension into their name.