I am British and I’ve been working in Bahrain for over 10 years but have not been contributing to my UK State Pension. I’m planning on being here another 10 years feel that the pension may no longer be available by then, should I bother with it?
Everyone should have 2 basic building blocks for their retirement planning state pension and some form of private saving. In the UK to get a full basic state pension, currently £102.50 a week, you need 30 years National Insurance contributions. If you have fewer you will receive a pension on a pro rata basis, so someone with 3 years would get £10.25. This pension is now undergoing the biggest overhaul for generations. One big changes arise in women’s state pension age this was already rising gradually to 65 by April 2020. But over the past year the government has been pushing through controversial proposals to raise this to 66 by that date, forcing half a million women to work longer for their pension. Looking further ahead the state pension age could rise beyond 70 as the government wants to link it to life expectancy.
There are also proposals for a single state pension worth £140 a week. From April next year the state pension will arise with the greats of 3 measures: the consumer prices index, earnings inflation or 2.5%. This has the potential to have a huge impact on state pension increases because CPI is typically lower than RPI. But if wages inflation is greater than both it will make any difference. Historically, wage increases have outstripped inflation. If the link between the state pension and earnings hadn’t been broken in 1980, it would be worth over £140 a week today.
If you want a bigger retirement income and the state will provide you with another pension, very few people living as expatriate in Bahrain have a 2nd pension and it is this area which I have addressed repeatedly in this column and continue to stress. It is never too late to start saving and if you don’t do it no one is going to do it for you! Enquire as to whether you can bring your contributions up to date to the state pension in the UK and arranged to continue payments by direct debit from now on in order to boost that income; after all every little helps!
