The Basic State Pension Explained

21-Oct-2009

Almost every UK resident can expect to receive a basic State Pension upon retirement (that is, at the age of eligibility for a State Pension).   The money to fund this Pension comes through taxation in the form of National Insurance Contributions (NICs).  

What age can you start receiving the basic State Pension?

So what is the age of eligibility for a basic State Pension?  According to the Directgov website (on the date this article was published): " This is 65 for men born on or before 5 April 1959 and 60 for women born on or before 5 April 1950.

-->> Click here to protect your loved ones with life insurance today <<--

The State Pension age for women born on or after 6 April 1950 but before 6 April 1955 is rising from 60 to 65 between 2010 and 2020. The State Pension age for women born on or after 6 April 1955 but before 6 April 1959 is 65. State Pension age will increase for both men and women from age 65 to 68 between 2024 and 2046."*

* In the 2010 Spending Review on 20 October 2010, Chancellor George Osborne announced that the state pension age is going to rise to 66 for both men and women in 2020, earlier than originally planned. (Updated - 21 Oct 2010)

Eligibility for the basic State Pension

Everyone who makes National Insurance contributions effectively pays the pensions of those who are at Pension age at the time.  Your State Pension at the time of your retirement will depend on a number of factors, including the current Pension allowances in place and the number of years you have been living and working in the UK and, crucially, contributing to the scheme.  

In 2009-2010 you need to be earning at least £4,940 a year if you are employed or £5,075 if you are self-employed in each year and to be paying National Insurance to qualify for the basic State Pension.  Currently, men need 44 such qualifying years to get the full State Pension, and women need 39.

Parents and Carers

If you are a parent or carer and therefore have not paid enough NICs to be eligible for the basic State Pension, you may be eligible for a scheme called 'Home Responsibilities Protection'.  If you reach the age where you can claim a State Pension before 6th April 2010, this Home Responsibilities Protection works to reduce the number of qualifying years that you need.  

If you reach State Pension age after this date, Home Responsibilities Protection is being replaced by National Insurance credits.  Any years of Home Responsibilities Protection you have built up before April 2010 will count towards these, so you should not lose out as a result of the change.

Finding out how much you will be eligible to receive when you retire

In 2009-2010 the full basic State Pension is £95.25 a week for a single person and £152.30 a week for a couple.  However, your individual circumstances as mentioned briefly above may affect the amount that you'll receive.  If you would like to know exactly what your State Pension is worth now, and also how much you would receive at Pension age (provided that the Pension amount stays the same by the time you reach retirement age), you can contact HMRC and request a State Pension Forecast.  

Some restrictions on applying for a Forecast are that you must live in the UK, not be widowed (or have lost your civil partner) and not be more than 30 days away from State Retirement age.   You can do this either over the phone  on 0845 3000 168 or online at the Department for Work and Pensions website (www.thepensionservice.gov.uk), and you must have your National Insurance number to hand.  The State Pension forecast will give you information about your basic State Pension and your State Second Pension (also known as S2P).


-->> Click here to protect your loved ones with life insurance today <<--