The state pension is something most Britons are set to enjoy in their later years, after a lifetime of hard work and contributing to the economy.
But pensions can be tricky to understand, from working out how to get your state pension, or another pension, down to calculating how much you are entitled to.
The reasons why you are entitled to a particular amount can also be confusing, but there is a simple formula to calculate just how much you can expect to receive.
According to Gov.UK, the full new State Pension is £164.35 per week, and what you’ll receive is based on your National Insurance record.
Your National Insurance record before 6 April 2016 is used to calculate your “starting amount”. This is part of your new State Pension.
Contrary to popular belief, you do not get a pension automatically, most Britons need to claim the money for their retirement.
The only people who get their pension automatically are men born before 6 April 1951 and women born after 6 April 1953.
Around four months before retirement, you should receive a letter from the Pension Service detailing how to claim your pension.
The age for the State Pension has recently climbed from 65 to 68 for both men and women. Those born between 6 December 1953 and 5 October 1954 will reach state pension age at 65 and 66.
When it comes to working out how much you’re entitled to, the exact money you get is calculated by dividing £164.35 by 35 and then multiplying by the number of qualifying years after 5th April 2016.
The starting amount from your National Insurance record before 6th April 2016 is £120 a week.
Britons need at least 10 qualifying years on the National Insurance record to get any State Pension, they also need 35 years to get the full new State Pension.
According to the State Pension website, you’ll get a proportion of the new State Pension if you have between 10 and 35 qualifying years.
Possibly increasing your potential earrings, the new State Pension increases each year by whichever is highest – earnings or prices.
Earnings represent the average percentage growth in wages, while prices indicate the percentage growth in prices in the UK, measured by the Consumer Prince Index.
If both indicators are under 2.5 per cent, the pension will be increased by that 2.5 per cent.
A State Pension statement will also let you figure out how much you will get, which can be calculated on the Gov.UK website.
Recently it was revealed that many Britons are actually at risk of outliving their pension pot.
A new study by the Pensions Policy Institute (PPI) stated that 28 per cent of retirees face decisions that could see them outlive their pot, and also offered advice on how to stop that from happening.
The study stated that if Britons withdraw between 3.5 per cent and 10 per cent per year, the Pensions Policy Institute found that these decisions could potentially increase the number of years they spend in retirement after having depleted their pension savings by up to 15 years.