Most UK residents will qualify for a state pension. There are two government administered state pensions – Basic and additional State Pension.
Basic State Pension
For 2008/9 the State Pension is worth £90.70 per week, or £145.05 for married couples. At current rates this is less than a quarter of the average UK earnings.
The amount you’ll get when you retire is based on the number of qualifying years you’ve gained through National Insurance Contributions (NICs), and you’ll normally need 90 per cent of your working life to be qualifying years to get a full Basic State Pension.
If your NICs are incomplete, you may also be entitled to Pension Credit, a means-tested benefit that ensures that people with little or no savings receive extra money.
Additional State Pension
The additional State Pension is an earnings-related pension, payable on top of the Basic State Pension.
Until April 2002, the additional State Pension for employees was called the State Earnings-Related Pension Scheme (SERPS). The amount of SERPS pension you received was based on a combination of your NICs, and how much you earned.
In April 2002, SERPS was reformed and renamed the State Second Pension (S2P). It now gives a more generous additional State Pension to low and moderate earners, certain carers and people with a long-term illness or disability.
If you have joined an employer pension scheme you may have been “opted out” of the additional state pension. You can find out more from your scheme administrator or by getting a State Pension forecast. The government encourages companies to organise company pensions for their employees.
Get a State Pension forecast
The payments on both the Basic and additional State Pensions are likely to be small in comparison to your current earnings. For a better understanding and to help you plan, you should get a State Pension Forecast from The Pension Service.
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