State Pension Benefits

What does the state provide?

Currently there are two state pensions that are credited in respect of National Insurance contributions paid from employer and employee. These are:

The Basic State Pension

Some still refer to this as the Old Age Pension. It is dependent on the National Insurance contribution record over an individuals working life.

If you are not sure whether you will receive this pension, you should complete a State Pension Forecast request and you will be provided with a quotation. The current basic state pension for a single person with fully qualifying years is £90.70 per week(2008/09) -Yes that’s right some people actually have to live on this!

Increase to Basic State Pension for wife

This is an additional amount, payable if a wife is not entitled in her own right to a basic pension. This amount is currently £52.30 per week(2007/08). 

State Second Pension ( S2P )

Formally SERPS, this is the earnings related part of the State Retirement Pension and is dependent on earnings since April 1978 on which NI contributions have been paid as an employee. Again if you require a quotation of your benefits you should complete a  State Pension Forecast request and you will receive a forecast of promised benefits. It is possible to ‘contract out’ of S2P.

Contracting out of S2P

Individuals may contract out of S2P either through their employer's occupational pension scheme (if a contracted out scheme) or by individually contracting out through an Appropriate Personal Pension Plan.

Effectively this means that certain amounts known as ‘rebates’ are reclaimed from the DSS each year by the pension provider and paid into the individual’s plan.

The resulting fund is then used to buy a private pension instead of S2P.