When thinking about your future, it’s vital to know what you’re entitled to.
With a large variety of pension schemes available, both through the government and through your place of work, calculating your retirement fund can be confusing.
Whether you’re starting to plan for life after work, or you’re simply interested in learning more, the best place to start is learning about your basic State Pension.
What is the basic State Pension?
The basic State Pension is a regular payment, provided by the government, which you receive when you reach State Pension age (SPA).
It’s automatically paid into an account of your choice every four weeks, although you must have paid or been credited with a certain amount of National Insurance contributions in order to claim.
How much is it?
As of 2012/13, the maximum basic State Pension is currently £107.45 per week.
However, it’s also important to consider that this amount increases every year. The amount it increases by will be determined by whichever of the following factors is highest:
- The average growth in wages in the UK (%)
- The growth in prices in the UK, as measured by the Consumer Prices Index (%)
- 2.5%
Am I eligible?
There are a number of factors which may affect eligibility.
Firstly, the earliest you can claim is when you reach State Pension age. The minimum age is subject to change, so always check to make sure you’re up-to-date.
Aside from age, in order to get the maximum basic State Pension you must have completed the minimum number of qualifying years (years paid or credited as paying NI), which is currently 30 years.
Qualifying years
Qualifying years are years you have paid, or are credited as paying, National Insurance. In order to qualify, one of the following must be applicable:
- You were/are employed, and paying NI (earning over £5,564 p/a)
- You’ve been self-employed and paying NI contributions
- Your spouse or civil partner has NI contributions that cover you
- You’ve been paying voluntary NI contributions
If you’re not working, you may have been receiving NI credits if any of the following apply:
- You provide care for a child under 12
- You provide care for a sick/disabled person
- You are a registered foster carer
- You receive Carer’s allowance
If you’ve been receiving benefits (unemployment, sickness etc), you may also have been receiving credits which count towards qualifying years. It’s also possible to top up your payments if you have less than 30 qualifying years.
For more information on your eligibility, visit gov.uk/state-pension/eligibility
How do I claim?
You should receive a letter four months before you reach SPA, instructing you on your next steps. If you don’t get sent anything, you can call the State Pension claim line on 0800 7317898 to find out more.
Claiming you State Pension is simple, and can be done through a variety of mediums, and can be done online, over the phone, or through your local pension centre.
You will still be able to claim if you’re living abroad, but services will differ from country to country.
For more information, visit gov.uk/state-pension/how-to-claim
Deferral
After you reach SPA, it is possible to carry on working and still claim your State Pension. However, you can choose to defer, which may increase the amount you get (either as part of your pension, or as part of a lump sum).
The amount you receive will be dependent on how long you choose to defer for, and how much you claim through your pension. Before you decide on deferring, it’s always advisable that you explore all available options. Get in touch with your local pension centre and they’ll be able to talk you through the benefits and drawbacks before you make your decision.
Additional State Pension
As well as your basic State Pension, it is possible to receive an extra amount of money, based on your NI contributions. This is known as the Additional State Pension.
The amount of this payment is dependent on your earnings, and if you have claimed specific benefits. Unlike the basic State pension, there is no flat rate to this, and you don’t have to do anything extra in order to claim it. You will be notified the amount of your ASP when you receive your first pension payment, and it’s then added to your overall amount.
To find out more about your basic State Pension, visit www.gov.uk/workplacepensions
