The fan of the show explained they were 48 and had worked self employed all their life, and had always paid National Insurance. They wanted to know if they were too late in life to start a pension or if it would be worth setting one up.
Mr Lewis responded to say it would definitely be a good idea to set up a pension even at her stage in life, as this would be an “obvious thing to do”. He said it was good to hear she had been paying in her National Insurance (NI) as this would be building up her entitlement to the state pension.
You typically need 35 years of NI contributions to get the full new state pension, which currently pays £241.30 a week. So if the person had paid in had paid full contributions up to the age of 48, they may have paid in 30 years’ worth already, potentially meaning they are very close to qualifying for the full amount when they claim their state pension.
They also have a long way to go to build up the rest of their entitlement for the full amount, as the state pension age is currently moving up gradually from 66 to 67, between April 2026 and April 2028. This person’s state pension age may well be 68, as plans are in place to move the access age from 67 to 68, between April 2044 and April 2046.
State pension warning
There has been discussion of moving forward the timetable for the move from 67 to 68. However, Mr Lewis added a word of warning about the state pension and what its purpose is.
He said: “The state pension is not about giving you a good living, once you are into your retirement. It is about giving you a subsistence living and enabling you to get through it, once you are into your retirement.”
The full new state pension currently pays around £12,550 a year. Yet figures from Pensions UK suggest a single person needs £13,400 a year of income for a basic standard of living in retirement, almost £1,000 more than you can get from your state pension. A couple would need £21,600 income for a basic lifestyle.
If you want a moderate lifestyle in retirement, a single person would need around £31,000 a year, almost triple the state pension. A couple would need £43,900 coming in.
In light of this principle, Mr Lewis said it’s all the more important to build up some later life finances through your pensions. He said: “So it is always good if you can, if you want to live more akin to the style that you have had in your working life, to be putting some money into your pension.”
