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Tuesday, 18 January 2011

Just about to retire – what you need to do

Immediately before you reach your State Pension age there are some steps you need to take. Find out how to make sure you get the State Pension and benefits you're entitled to. You should also contact your Tax Office to make sure you get any increased tax allowances you qualify for.

State Pension and age-related benefits

Claim your State Pension

Four months before you reach State Pension age, you'll receive a letter from The Pension Service. This letter outlines the choices you have about when to claim your State Pension and inviting you to claim it.

If you don't receive anything, call The Pension Service on 0800 731 7898. Lines are open Monday to Friday 8.00 am to 8.00 pm, and on Saturday from 9.00 am to 1.00 pm. You can also download the 'State Pension claim form' below. You'll need to send the form to your nearest pension centre.

State Pension age increases

The age that you can get your State Pension is changing. See ‘Proposed changes to State Pension age’ to find out how these changes may affect you.

Claim the Winter Fuel Payment

If you were born on or before 5 July 1950, you could be entitled to a Winter Fuel Payment for winter 2010/11. In most cases this is paid automatically.

Apply for Pension Credit if you are on a low income

Pension Credit guarantees those living in Great Britain, who have reached the minimum qualifying age, a minimum weekly income of:

  • £132.60 if you are single 
  • £202.40 if you have a partner

If your income is below these amounts then Pension Credit can top your income up.

The age that you can get Pension Credit is gradually increasing from 60 to 65. This is in line with changes to the State Pension age for women. To find out the age when you may be able to apply for Pension Credit, you can use the State Pension age calculator.

The new proposals to further increase the State Pension age from 65 to 66 by 2020 are likely to affect the Pension Credit qualifying age.

For more details, call the Pension Credit application line on freephone 0800 991 234 or textphone on 0800 169 0133. Lines are open Monday to Friday 8.00 am to 8.00 pm and on Saturday from 9.00 am to 1.00 pm. Or you can download a form to complete and post to your pension centre free of charge.

Cold Weather Payments

Cold Weather Payments can help people who receive certain benefits and are paid during periods of very cold weather to help with extra heating costs. They are paid automatically so you don't need to claim them.

Other benefits you may be entitled to

Depending on your circumstances, you may be entitled to other benefits when you retire, such as Housing Benefit and Council Tax Benefit.

Notifying your Tax Office

HMRC need to know about your income when you retire or reach State Pension age so that they can make sure you:

  • receive the right tax-free allowances  
  • pay the right amount of tax
  • stop paying National Insurance contributions

If you're a woman you'll also need to tell HMRC what your income is again when you're 65.

Receiving and completing form P161 Pension Coding

It's very important that when you receive your Pension Coding form you fill it in and return it. If you don't, you won't be considered for increased age-related tax-free allowances. You could end up paying too much tax on your pension income, savings and interest.

If you don't receive the Pension Coding form within a month before reaching State Pension age, you can download the form below. Complete the form and return it to your Tax Office. Alternatively, you can contact your Tax Office and ask them to send you one.

National Insurance contributions at State Pension age

Once you're over State Pension age you don't have to pay Class 1 or Class 2 National Insurance contributions if you carry on working. You'll only have to pay them on any earnings that were due to be paid to you before you reached State Pension age.

However if you're self-employed you may still have to pay Class 4 National Insurance contributions after you reach State Pension age. This is because they're an annual charge. This means you may still have to pay them on any taxable profits for the year in which you reach State Pension age.

Your pensions and tax

State Pension is paid to you without any tax taken off, whereas other pensions are normally taxed before you receive them. It's important for the Tax Office to know how much you're receiving of each type of pension and when payments began. If you're a taxpayer you'll need to pay tax on your State Pension. If you're not you may be due a refund of tax on other pensions.

Self assessment and claiming Pension Credit

If you are a self assessment taxpayer and are considering claiming Pension Credit, see ‘Income, benefits and Pension Credit’ for more information.

Company and personal pension

Your company or personal pension will have rules about when you can retire and take your pension. Contact the administrators of your company or personal pension to find out when you can get your pension.

Trace a company or personal pension

If you have lost the contact details of your pension scheme and need help contacting them, then the Pension Tracing Service may be able to help.

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