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The State Pension – What you need to know

The basic State Pension is a pension that the government pays to those who reach State Pension age. Eligibility for the basic State Pension is based on the number of ‘qualifying years’ a person has accumulated. These years are gained through the National Insurance Contributions (NICs) that a person has actually paid, has been credited with or has been treated as having paid throughout their working life. It is important to realise that the State Pension is not a lot of money. The state pension age will rise with longevity.

Take a look at our State Pension Age Calculator to find out when you can retire.
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It is designed to keep retirees above the poverty line and not by too much. If you want to have a more comfortable level of life in retirement, setting up a STAKEHOLDER PENSION of your own could be a good idea.

Find out more about the Stakeholder Pension.

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2012/13

For the 2012/13 tax year, the basic single state pension is £107.45 per week which many may find is insufficient in meeting even ordinary everyday expenses such as grocery and utility bills. When holidays, presents and other extras are taken into account, relying entirely on this sum may require a significant change in lifestyle.

The government has announced a new ‘flat-rate’ state pension that will give pensioners £144 in today’s money. This will not take effect until 2017 at the earliest. From April 2017, 35 years (rather than 30 years) of National Insurance contributions will be required to receive the state pension.

See if you’re entitled to Pension Credit.

What are qualifying years?

Qualification for the basic State Pension is based on accumulating a sufficient number of qualifying years before reaching State Pension age. A qualifying year is a tax year where a person:

• has sufficient income to pay National Insurance contributions;
• is treated as having paid National Insurance contributions; or
• is credited with enough contributions

You can get an idea of how many qualifying years you have and what this means for you by using our State Pension Calculator.

How many qualifying years are needed?

The number of qualifying years a person needs for a full basic State Pension depends on their age and their sex:

• Men born before 6 April 1945 usually need 44 qualifying years
• Women born before 6 April 1950 usually need 39 qualifying years
• Men born after 5 April 1945 need 30 qualifying years
• Women born after 5 April 1950 need 30 qualifying years

A person who reaches State Pension age on or after 6 April 2010 needs just one qualifying year in their working life to qualify for some basic State Pension.

To work out your State Pension Age use our State Pension Age Calculator.

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Those who have been parents or carers

A person who reaches State Pension age on or after 6 April 2010 may be able to get new National Insurance credits which allow them to build up an entitlement to the State Pension. They may be eligible for credits if they are:

• a parent with a dependent child under 12 years of age;
• an approved foster carer;
• caring for at least 20 hours per week for one or more severely disabled people.

Credit System

The credit system replaced the Home Responsibilities Protection (HRP) scheme which people who cared for others were eligible for up until 5 April 2010. HRP assisted in protecting a person’s State Pension entitlement for those years when they were either not working or had low earnings. Those who have reached the State Pension age on or after 6 April 2010 now receive credits rather than HRP. If any HRP has been accumulated on or before 5 April 2010, then 22 of these years shall automatically be converted into credits and will count towards a person’s basic State Pension.

If a person has been claiming benefit

National Insurance credits are automatically received for those weeks that a person has been claiming the following benefits (on the basis that enough NICs have been paid):

• Carer’s Allowance
• Jobseeker’s Allowance
• Incapacity Benefit
• Employment and Support Allowance

How much is the basic State Pension?

The full basic State Pension for the 2010/2011 tax year is £102.15 per week. The full basic State Pension for a married woman using her husband’s National Insurance record is £61.20 a week. Therefore a married couple could get separate basic State Pension payments totalling £163.35 per week. In each case, a person’s individual circumstances may affect the final amount received.

The Basic State Pension, even at it’s full level, is not a lot of money. It is important you build up some sort of Retirement Savings, you can set up your own Personal Pension Here.

Have you been saving into other pensions over the years? compare top providers to find the best income.

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For those who reach State Pension age on or after 6 April 2010

If a person has some qualifying years but not enough for a full basic State Pension then they will get some basic State Pension for each qualifying year earned. Should this amount be insufficient, they may be able to take action to increase their State Pension.

For those who reached State Pension age before 6 April 2010

A person will receive a weekly basic State Pension between the minimum (£24.41 in 2010/11) and the maximum (£97.65 in 2010/11) if:

• they do not qualify for the full basic State Pension; and
• they have 25 per cent or more of the qualifying years

A person will not be entitled to any basic State Pension using their own National Insurance contribution record if less than 25 per cent of the qualifying years required have been accumulated. However, they may be able to take action to increase their State Pension.

If you are unsure when you will reach SPA (State Pension Age) use our State Pension Age Calculator Here.

Non-Contributory

A ‘non-contributory’ or ‘Over 80 Pension’ may be available for persons aged 80 or more and who meet the residency conditions; for the 2010/11 tax year, this is £58.50 per week. Those who have been married or in a civil partnership may be entitled to some basic State Pension through the National Insurance record of either their spouse or civil partner or their former or late spouse or civil partner. It is possible to make voluntary National Insurance contributions, whereby you can purchase a year’s contribution for around £600. You pay a lump sum to the government for the contributions, who will credit you with an extra years contribution when calculating your State Pension and state social benefits.

Pension Credit

For pensioners living in Great Britain, Pension Credit could be used to top up weekly pension income to a guaranteed minimum of:

• £142.70 if for a single person
• £217.90 for those with a partner

The age from which Pension Credit is available is gradually increasing from 60 to 65 between April 2010 and 2020.

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More Information on State Pensions

Additional State Pension

Voluntary National Insurance Contributions

State Pension for the Self Employed

Deferring your State Pension

What happens when you die?

Contracting Out

State Pension – FAQ