What is the state pension?
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The pension paid from
the state can be divided into essentially two layers. The first is a
flat-rate (i.e. not related to the level of your earnings over your
lifetime) pension payable to all those who have paid a sufficient number of years of National
Insurance contributions, this is called
The Basic State Pension (BSP).
The Basic State Pension is the cornerstone of the UK's state
pension system. It provides a basic level of pension, rising year on
year with the rise in price inflation and is available to all those
who have paid a sufficient number of years of
National Insurance
contributions.
The full Basic State Pension is currently £4,027.40 per year (i.e.
around £77.45 per week) for a single person and £6,437.60 per year (or
£123.80 per week) for a married couple. The exact amounts available
differ for different individuals but if you want to know exactly how the BSP
is calculated then read the guide to the BSP.
The second layer is an earnings related pension (i.e. the amount you
get depends upon the level of your earnings over your lifetime)
which used to be called The State Earnings Related Pension Scheme
(SERPS) but is now called The State Second Pension
(S2P). The Additional State Pension is payable in addition to
the Basic State Pension and was introduced with effect from 5 April
1978.
The amount of the Additional State Pension is dependent upon
the level of your national insurance contributions over your entire
career. However as a very rough guide if you have earned national
average earnings all your life, paid national insurance
contributions for the whole of the time and have not
'contracted-out' then it might be something in the order of £4,000
per year. However if any of the above is not the case then it could
be much less!
In addition to these their also exists something
called the
Graduated Retirement Benefit
which is an earnings
related pension for whose who were in employment prior to 6 April
1976. An additional age allowance also exists for those over age 80.
Whilst not sometimes regarded as a pension other elements of the
social security system (i.e. income support, incapacity benefit,
etc) are also available for those in retirement. To read about these
other benefits look under
Other State Benefits.
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How much is the state pension?
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The state pension is split into various parts and is different
for each individual. You can request a
forecast from
the government. If you want to understand how the state
pensions are calculated then read on...
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If you have a pensions
related question then please let us
know.
If it's something other people
would find useful then we will post an answer in our Frequently Asked Question
(FAQ) area.
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Use our online calculator
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Read the guide to
investment in the pensions guide. It explains what you need to
think about before investing for your retirement.
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