Why is this important?
Table of contents
A pension is money you'll use to live on when you retire. Most people can get State Pension, a regular payment people can claim when they get to state pension age. The amount you'll get varies depending on your situation.
This page gives you basic information about:
- how State Pension works
- how you can build up extra State Pension
- when to claim State Pension
- what happens if you want to carry on working after State Pension age
- where you can get further information about pensions.
For more information about what benefits you may be entitled to when you retire, see Benefits for older people.
When you reach state pension age, you can claim a State Pension if you've paid enough National Insurance Contributions during your working life.
How much State Pension you get depends on the amount of National Insurance Contributions you've paid.
To get the full basic State Pension, you will need to have paid 30 qualifying years of National Insurance Contributions.
If you're not working, you may be able to get National Insurance credits towards your State Pension. You can get credits if, for example, you claim Jobseekers Allowance, Carer's Allowance or Employment and Support Allowance.
You may also be entitled to credits towards your State Pension if you've looked after children or cared for someone long-term.
You can get an estimate of how much State Pension you may get in future on the GOV.UK website. This is called a State Pension Statement. Go to: www.gov.uk.
nidirect also has lots more information about changes to the State Pension. Go to: www.nidirect.gov.uk
For more information about State Pension, see Benefits for older people.
State Second Pension, sometimes called additional state pension, is a way of saving extra money each week to top up your basic State Pension. When you're working, you pay extra National Insurance contributions which give you a higher State Pension when you retire.
You won't get State Second Pension if you've opted out of it. You may have opted out of State Second Pension if you belong to a workplace pension scheme. This is called contracting out.
For more about opting out of State Second Pension, see Workplace pensions.
Who can get State Second Pension
You can build up entitlement to State Second Pension if you are:
- employed and earning over £5,772 in 2014-2015 (from any one job)
- looking after children under 12 years old and claiming Child Benefit
- caring for a sick or disabled person for more than 20 hours a week and claiming Carer's Credit
- a registered foster carer and claiming Carer's Credit
- receiving certain other benefits due to illness or disability.
When can't you get State Second Pension
You don't build up entitlement to State Second Pension while you're self-employed, unemployed or in full-time training. You can get credits towards your basic State Pension while you are not working, but you won't build up State Second Pension. In some cases, if you are unable to work because of illness or disability, you will not build up State Second Pension.
State pension age used to be 60 for a woman and 65 for a man. This changed from 6 April 2010 and the age difference between men and women is gradually being made the same.
To check when you will reach state pension age, you can use the GOV.UK state pension age calculator. Go to: www.gov.uk.
You don't have to claim your State Pension when you reach your state pension age. If you want, you can put off (defer) your claim and earn extra pension.
If you've already claimed your State Pension, you can cancel the claim so that you can get extra pension later on, but you can only do this once.
Interest adds up on the deferred amount of your pension to give you more money when you do claim at a later date.
The extra pension can be paid to you either as an increase in your weekly rate of State Pension, or you can get it as a lump sum on top of your normal weekly pension.
You can get more information about deferring your State Pension on the GOV.UK website at: www.gov.uk.
You can get more information about deferring your State Pension on the nidirect website at: www.nidirect.gov.uk.
You can get advice about claiming State Pension from an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
You can choose to keep on working, whether paid or on a voluntary basis, while claiming your State Pension. Any money you earn may affect your entitlement to other benefits such as Pension Credit, Housing Benefit and Council Tax Reduction (help with your rates in Northern Ireland).
You can also continue to work and claim your workplace pension This includes drawing out some of the pension you've built up while continuing to work for the same employer.
For more information about other state benefits, see Benefits for older people.
Changes from 2016
If you are due to reach state pension age after 6 April 2016 you will get a single-tier pension instead of the current basic State Pension and a State Second Pension. If you contribute entirely to the new single-tier system you will receive a single sum based on 35 years qualifying years of National insurance contributions. If you have fewer than 35 years when you reach state pension age you will get a reduced amount. However, you will normally need at least ten qualifying years. If you have made National insurance contributions or received credits under the current system these will be converted into a single-tier foundation amount. There is more information about the changes coming in 2016 on the GOV.UK website at www.gov.uk. There is also a factsheet available about the changes at www.gov.uk.
Top-up scheme for existing pensioners
If you are an existing pensioner or will reach pension age before 6 April 2016 a top-up scheme is being introduced from October 2015. Under this scheme you will be able to pay a lump sum National Insurance contribution in order to increase the amount of weekly pension you receive by up to £25 a week. The amount you will need to pay to increase your pension will depend on your age, with rates going down as you get older. For example, to get an extra £1 of state pension a week for life you would need to pay £890 if you are 65 and £674 if you are 75.
The state pension top-up can be inherited by a surviving husband, wife or civil partner.
You can find out how much you would need to pay to increase your pension by between £1 and £25 a week at www.gov.uk/state-pension-topup.
You can pre-register your interest in the scheme by emailing email@example.com or by telephoning 0845 600 4270.
For more information about State Pension and other benefits you may be able to get when you retire, see Benefits for older people. For more about other types of pensions and starting a pension, see Pensions.
You may also find the following Adviceguide information helpful:
The Money Advice Service
The Money Advice Service is a free, independent service. Their website has lots of useful information about pensions including comparison tables for choosing a personal pension provider and a pension calculator for working out how much pension you'll need. There's also a range of leaflets to help answer your pensions and retirement questions.
Go to: www.moneyadviceservice.org.uk.
GOV.UK (in England, Wales and Scotland)
GOV.UK is the government website. It has information about state pension, workplace pensions and personal pensions. it also has information about the changes that will be happening in 2016.
Go to: www.gov.uk.
nidirect (in Northern Ireland)
nidirect is the official government website for Northern Ireland citizens. It has lots of information about the state retirement pension and other types of pensions, saving for your retirement and the changes to pensions that will be happening from 2016..
Go to: www.nidirect.gov.uk.
The Pensions Advisory Service
Helpline: 0300 123 1047
The Pensions Advisory Service is an independent organisation that gives free information and advice on pension planning, including state, personal, workplace and stakeholder schemes.
TPAS doesn't provide financial or investment advice or recommend products.
The Age UK website has information about state pension, including a detailed factsheet which can be found at www.ageuk.org.uk.
The Department for Work and Pensions
The Department for Work and Pensions has produced a leaflet called 'State pensions - Your guide'. To download a copy, go to www.gov.uk.