The State Pension explained

Do you know how much money you will receive with your State Pension when you retire? Do you know where to go to get advice about your pension? If not, surveys show that you are not alone; many people are totally in the dark when it comes to their state pension. We examine what the State Pension is and how you can best obtain pension advice to suit your personal needs. To find out more visit http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008

What is a State Pension?

A State Pension is a pension paid to everybody who has worked and paid National Insurance Contributions. It becomes payable when you reach State Pension age. For men this means when you reach the age of 65 and for women this means from when you reach either the age of 60 or 65, depending on your year of birth.

Does everybody receive it?

Unfortunately you will only receive a State Pension if you have made enough National Insurance Contributions. These contributions are payable from the age of 16 to 65. This does not mean that you will have to work 49 years in order to contribute enough. It is worth noting that National Insurance Contributions can sometimes be made on your behalf when you are unemployed or a full time carer and that you can also make voluntary contributions, if, for example you have a National Insurance shortfall in a particular year. Furthermore, you are allowed five full years of no contributions at all. This means that you actually have to contribute enough for 44 years in order to qualify for a State Pension at the age of 65.
If you have not paid enough contributions you may receive a partial pension or if you have paid less than 25% you may receive nothing at all.

How much money will you receive?

If you have paid enough National Insurance Contributions the current State Pension amount for 2005/6 is £82.05 (single) and £131.50. This will increase annually in line with the Retail Price Index.