The government recently announced that the State Pension will increase by 8.5%, under its commitment to the State Pension triple lock. The triple lock ensures that the State Pension doesn’t lose value over time. You can learn more about it here.

With the increase, you might be able to claim up to approximately £11,500 a year in State Pension from the government.

While that might sound like enough to help you get by, the reality is if you’re planning to live on the State Pension alone you may find yourself short of cash.

Here’s why the State Pension might not be enough for you to live on, and our top tips to help you save more for your life after work with your Fund pension, including making Additional Voluntary Contributions (AVCs).

Why the State Pension might not be enough:

The cost of retirement is higher than ever

The Pensions and Lifetime Savings Association (PLSA) has released their updated Retirement Living Standards (RLS). The RLS estimate how much you might need in retirement each year, based on 3 different standards of living – minimum, moderate and comfortable.

According to the RLS, a single person needs £14,400 to afford a ‘minimum’ standard of living. That means even if you’re able to claim the full amount of State Pension, you’ll be approximately £2,900 short of a minimum standard of living in retirement. And that’s without budgeting for any extra personal costs, such as mortgage or rental outgoings.

To get an idea of how much you might need try the Retirement Budgeting Calculator in your myFund account. It’s based on the RLS and lets you add your personal lifestyle costs, including how many holidays you’d like per year, your motoring or transport costs and where you plan on living.

You might not be able to claim the full amount of State Pension

The amount of State Pension you’ll get depends on your National Insurance (NI) record. To claim the full amount of the State Pension, you’ll need 35 qualifying years of NI contributions or credits.* You can check your State Pension forecast at Gov.uk.

If you’ve previously worked part-time, you might not have paid as many NI contributions or credits over the years. And, this could impact the amount of State Pension you might be able to claim later.

You may be able to ‘top up’ your NI record by paying voluntary contributions, if you’re eligible. You can learn more about Voluntary National Insurance at Gov.uk.

You'll need to wait until your State Pension age (SPA) to claim it

You won’t be able to claim your State Pension until your State Pension age (SPA), which is currently age 66 for both men and women.

But, the SPA is set to increase again from May 2026. So, if you’re planning to retire before you reach your SPA, you’ll need to consider how you’ll pay for your retirement during that time.

The State Pension is currently less than the National Minimum Wage

In life after work, most of us would like to continue the lifestyle we’ve enjoyed while working. But, living off the State Pension alone might mean it’s difficult to maintain that standard of living. Here’s an example to explain why.  

If, while you were working, you earned the National Minimum Wage and worked 35 hours per week, your yearly income would be approximately £19,000.

If you then reach State Pension Age (SPA), and are able to claim the full amount of State Pension from the government, your State Pension income would be approximately £11,500 a year.

Comparatively, your State Pension income would be roughly £7,500 less than the income you had while you were working. This could significantly impact the lifestyle you’re able to afford in retirement. What’s more, the difference could be even greater if you’re not able to claim the full amount of State Pension.

Your State Pension might not increase if you live abroad

Moving abroad to spend retirement under the sun is something many of us have dreamt about. While the idea of life after work in another country might capture your interest, it’s important to consider that your State Pension might not increase while you’re living there.

Currently, your State Pension will only increase each year if you live in:

• The European Economic Area (EEA)

• Gibraltar

• Switzerland

• Countries that have a social security agreement with the UK (but you cannot get increases in Canada or New Zealand)

You will not get yearly State Pension increases if you live outside these countries. However, your State Pension will go up to the current rate if you move back to the UK.

You can learn more about how your State pension is affected, including how you can claim it if you move abroad at Gov.uk.

How you could save more:

As a member of the British Transport Police Force Superannuation Fund (BTPFSF, or Fund), you’re already saving towards a retirement income which you’ll get separate to your State Pension.

You can find out how much you might get from your Fund pension by using the pension planning tools in your myFund account.

Here’s how being part of the Fund is already helping you save towards your retirement, and how you could save even more for your future…

You’re increasing your savings with tax relief

A fantastic thing about saving with your Fund pension is that its tax efficient, because the money you pay in is taken from your salary before tax is deducted. This means you pay less tax on your salary. Over the years this can add up to a substantial amount.

The amount of tax relief you get depends on the rate of income tax you pay. Basic-rate taxpayers (who pay 20% income tax) get tax relief at the same rate. If you’re a higher-rate taxpayer you get 40% tax relief, and additional-rate taxpayers get 45%.

For example, if you’re a basic-rate tax payer (who pays 20% income tax) and put £100 into your pension, it would actually only cost you £80. That’s because the other £20 comes from tax relief.

You can pay in as much money as you want into your pension, but there’s limits on the amount of pension savings that benefit from tax relief each year, before you have to pay tax. You can learn about the limits, and watch a short video on how tax relief works in the Video Library.

You can pay more in with Additional Voluntary Contributions (AVCs)

‘Topping up’ your pension with AVCs could help pay for your life after work. AVCs are extra contributions you pay into the scheme, on top of the regular contributions you and your employer pay in while you’re working.

AVCs might help you save more, particularly if you’re thinking about taking your pension early, or before your State Pension Age (SPA).   

You can pay in weekly, and you can make one-off payments if you wish. If you earn extra money like overtime or bonuses, or if you receive a monetary gift, paying it into AVCs is an excellent way to boost your potential retirement savings. Plus, you get tax relief on the money you pay in, up to certain limits.

If you want to start paying AVCs, you should speak to your employer. Here’s where you can find more information:

• BRASS is an Additional Voluntary Contribution arrangement for 1970 Section members who joined the Fund before 1 April 2007. Visit the BRASS page to find out more.
  
• AVC Extra is the main AVC arrangement for 2007 Section and CARE members. It’s also open to members of the 1970 Section who are already paying maximum pension and BRASS contributions. You can learn more on the AVC Extra page.
  

The MoneyFit tool in your myFund account can help you manage your money, and offer helpful tips to possibly free-up a little more to contribute to your pension savings.

You can take control of your pension and plan for the future

You can see how much your Fund pension might be worth when you retire using the pension planning tools in your secure myFund account. If you haven’t already, you can register for your myFund account here.

With an online account, you can request an estimate of your pension benefits quickly and easily. This will give you an idea of what your Fund pension might be worth, based on your current pension payments.

*Figures correct as at April 2024, but may be subject to change. Full details can be found at gov.uk/new-state-pension/what-youll-get.