What does the State provide?
It’s important to keep abreast of your pension provision, so you know that your retirement income will cover you for the lifestyle that you’d like to lead. This section will help you see what the State can provide.
Basic State Retirement Pension
To receive a full pension, you need to have paid or been credited with enough National Insurance (NI) contributions during your working life. If you want to find out whether you have enough NI contributions, visit www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp [External website]. The pension usually increases in line with price inflation. It is currently paid from age 65 for men and from age 60 for women, although the pension age for women will gradually increase to 65 over the period from 2010 to 2020 and the Government has announced plans to increase State pension age generally. If you want to find out more about the Basic State Retirement Pension visit www.thepensionservice.gov.uk [External website].
The State Second Pension (S2P)
S2P (previously known as SERPS) provides an extra pension on top of the basic pension and it is earnings related. Pension schemes that pay more than a minimum level of benefit can choose to opt out of S2P. This is called ‘contracting out’. Our nuvos pension scheme is contracted out – this means that members pay reduced NI contributions and will not receive S2P. If you have a personal pension such as our partnership pension account, you and your employer pay the standard (higher) rate of National Insurance contributions and you can either stay with S2P or contract out. If you contract out of S2P, the Government will pay a refund (known as a rebate), which will vary with your age, into a personal pension or stakeholder pension of your choice. This can be to one of the partnership pension account providers or any other of your choice.
National Insurance contributions are paid on all earnings over set limits. These limits are reviewed by HM Revenue & Customs and published on their website: www.hmrc.gov.uk/rates/nic.htm
Pension Credit
If your weekly income is less than a certain minimum level you may be entitled to have your income topped up. To find out if this affects you, visit www.thepensionservice.gov.uk/pensioncredit [External website].
