NS&I - The State Pension

Overview

• how the State Pension works

• how to qualify for the State Pension

• how much money to expect

• how to claim your money

The State Pension is designed to provide a regular income in retirement.

It’s organised by the government and funded through National Insurance contributions (NICs), which are a percentage of your earnings. Even without investing in other pension plans or relying on extra savings, you’ll receive a regular income in your retirement if you qualify.

How do I qualify?

To qualify for the State Pension, you need to have made sufficient NICs for a minimum number of years (which used to vary with your age and whether you're male or female). Men who reached retirement age before 6 April 2010 and had worked for 44 years paying full NICs would usually be entitled to the full State Pension on their retirement. For women who reached retirement age before 6 April 2010, the number of qualifying years was 39 years. Currently, men can claim their pension at 65, while women can claim theirs between 60 and 65 depending on their date of birth.

From 2016, the women's State Pension age will be increased so that it reaches 65 (the same as the men's age) by November 2018. Then, between 2018 and 2020, the State Pension age for both men and women will gradually rise to 66.

The good news is that for those who reach State Pension age on or after 6 April 2010, the number of qualifying years needed for a full basic State Pension is now 30 for both men and women.

You need to be earning enough during any tax year to pay National Insurance and make it count as one of these 'qualifying years'. If you don’t accumulate enough qualifying years during your working life, you can still claim the State Pension, but it won’t be the full amount. Instead, you’ll receive a proportion of your pension for each qualifying year you’ve built up.

There are exceptions to these rules (for example, if you’ve been looking after children or caring for sick or disabled people).

Find out more on the Directgov website >

How much will I get?

A single person who’s accumulated the full number of qualifying years currently receives £102.15 per week, while couples where one spouse doesn’t qualify for their own maximum State Pension can get up to £163.35 per week. If you have fewer than the required number of qualifying years, you’ll get less. The amount you receive is then reviewed every year to make sure it stays in line with inflation. From 2012, the State Pension will be increased annually in line with whichever is the highest of the percentage increase in average UK earnings, the Retail Prices Index, or 2.5%.

How do I claim the State Pension?

Men can currently claim their State Pension at 65, while for women the current State Pension age will increase from 60 to 65 by November 2018. This affects women born on or after 6 April 1950. Women can see what age they can claim theirs by using a State Pension age calculator.

Find out more at the Directgov website>

Around his time, the Pensions Service will usually send you a State Pension information booklet up to four months before you reach State Pension age, or you can contact them directly to get a forecast.

You can start claiming your pension even if you’re still working, though this won’t affect the amount of money you receive. Bear in mind, though, that if your total earnings are high enough, you may have to pay tax on your State Pension payments.

If you’re working, or don’t need the financial support of your State Pension immediately, it’s also worth considering delaying claiming it until a later date. This shouldn’t mean you’ll lose out – claiming later means either receiving extra to make up for the shortfall, or a lump sum payment.

Find out more at the Directgov website >