The Financial Benefits You Can Claim When You Retire
When you retire, there are a variety of benefits, discounts and advantages on offer once you reach retirement age. Some are offered by the state like pension top-ups, there is help to enable you to meet the cost of energy bills or free and discounted travel. However, you have to remember to claim them, as millions of UK consumers fail to do so, missing out on valuable income.
What UK pension and tax benefits can I claim?
Around 13 million people collect the state pension. How much you get will depend on how many years of National Insurance contributions you have contributed during your working life, whether or not you were paying into the state second pension, and the year you qualified for the state pension.
The state pension retirement age will rise to 66 by the end of 2020 and thereafter to 67. In 2020/21, the maximum level of the new state pension is £175.20 a week or £9,110.40 a year. You may get more or less than this depending when you retired and if you have made the full 35 years worth of National Insurance contributions during your working life.
Pension credit tops up the state pension for people who are on a low income. Guarantee credit tops your weekly income up to £173.75 in 2020/21 if you’re single and £265.20 for a couple.
Savings credit, which has disappeared for those qualifying for the state pension on or after 6 April 2016, provides £13.97 for a single person and £15.62 for a couple per week.
National Insurance cut
Once you’ve reached state pension age, you no longer pay National Insurance, even if you’re still working.
This can see a significant cut in your annual tax bill. National Insurance is charged at 12% if you’re an employee and 9% if you’re self-employed, on income between £9,500 and £50,000, and 2% above.
Someone earning £30,000 a year would save £2,460 in the 2020/21 tax year.National Insurance only applies to employment income, so if you retire before state pension age, and you only earn an income from pensions, you won’t have to pay National Insurance.
What housing benefits can I claim?
If your savings are below £16,000 or you’re on a low income or claiming certain benefits you might be eligible for housing benefit. You’ll need to apply through your local council if you’re only making a new claim for housing benefit.
Winter fuel payment
Winter fuel payments come in the form of a tax-free annual amount and just over 12 million people received them last year.
Retirees get it automatically if they receive the state pension or certain other benefits. The current rates are £200 per eligible household where the oldest person is under 80, and £300 for households containing someone aged 80 or over. You’ll need to be 65 to get the payment in winter 2020/21.
Cold weather payment
These are £25 payments for each seven-day period of very cold weather i.e if the average temperature in your area is recorded as being zero degrees Celsius between November and March.
You’ll be eligible for it if you claim any other income-related benefits, such as Pension Credit,Income Support Income-based Jobseeker’s Allowance, Income-related Employment, Support Allowance and Universal Credit.
What travel discounts can I claim?
The age at which you’ll qualify for the free bus or travel pass varies across the UK. While in Wales, Scotland, Northern Ireland and London you can get a pass for free travel when you reach 60, in the remainder of England you usually only become eligible for one when you reach state pension age.
Concessionary travel also allows some free travel on trains and ferries in Wales and Scotland under the National Entitlement Card respectively from age 60.
Londoners can get the 60+ London Oyster photocard at 60, which permits free travel on buses, tube, trams and London Overground, and then switch to the Freedom Pass at 65.
In Northern Ireland, those aged between 60 and 64 qualify for the 60+ SmartPass and then the Senior SmartPass when you reach 65.
The Senior Railcard, available to travellers aged 60 or over, is a widely-held retirement perk. It costs £30 a year and enables you to get a third off standard and first class anytime, off-peak and advance fares.