The Basic State Pension

The basic State Pension is a government-administered pension, based on the number of qualifying years of National Insurance contributions (NICs) you’ve paid (or are treated as having paid or have been credited).

If entitled, you receive a basic State Pension when you reach State Pension age: 65 for men and 60 for women (rising from 2010 to 65 for women by 2020).

In 2007-2008, the full basic State Pension is £87.30 per week, but individual circumstances may affect the amount you get.

You qualify by building up enough ‘qualifying years’ before State Pension age.

The number of qualifying years you normally need for a full basic State Pension is equal to about 90 per cent of your working life: calculated from the start of the tax year in which you reach 16 to the end of the tax year before the one in which you reach State Pension age. For most people this will be between 42 to 49 years, depending on whether you have continued studying etc.

There are a number of exceptions that apply to those who may have not built up enough contributions:

If you’ve been a parent or carer

If you’ve not paid enough NICs because you’ve been looking after children or caring for someone long-term, the number of qualifying years you need to qualify for the the basic State Pension will be reduced. This is known as ‘Home Responsibilities Protection’.

If you’ve been claiming benefit

If you’ve been receiving certain benefits, such as Carer’s Allowance, Jobseeker’s Allowance or Incapacity Benefit, you’ll have automatically received National Insurance credits for the weeks when you’ve been claiming.

'Pension Credit'

• Based on your assessed income and savings
• Guarantees a minimum income

If you’re aged 60 or over and living in Great Britain, the government’s Pension Credit could top up your weekly income to a guaranteed minimum of: £114.05 if you’re single £174.05 if you’re a couple From 2010, the age from which you can get Pension Credit will gradually increase.

Other means tested benefits for low income earners

• Housing Benefit
• Council Tax Benefit
• Over 80 Pension
• Winter Fuel Payment
• Cold Weather Payment
• Warm Front Grant
• Attendance Allowance
• Carer's Allowance
• Community Care Grants and Budgeting Loans
• Crisis Loans
• Low cost bus passes
• From age 60 you qualify for a free bus pass from you local council
• Free eye tests, prescriptions and help with other health costs
• TV licence reduction fee
• War Widow's/Widower's pension

• Previously called SERPS
• Reformed in 2002 and now called State Second Pension or S2P

The aim is to bolster basic state pension to low and moderate earners. It depends on your NI classification:

• If you are self-employed, you cannot contribute to S2P
• if you are an employee, you automatically contribute to a S2P pension (through your NI) unless you “choose” to contract out

• For more information on contracting out read this document: http://www.moneymadeclear.fsa.gov.uk/pdfs/contracting_out.pdf

How the State Second Pension helps disabled people and carers

If you are a carer, on low earnings or have long-term disabilities you can now benefit from an improved additional State Pension.

If you don’t work or if you earn less than the annual National Insurance lower earnings limit (£4,368 in 2006–2007), you can still build up an entitlement if you:

• look after a child aged six or less, and you are the person who claims and gets Child Benefit
• take care of someone who is ill or disabled, and you qualify for Home Responsibilities Protection
• are entitled to Carer’s Allowance (even where you don’t get this because you get a benefit that pays more)

How to claim the additional State Pension

Your entitlement to additional State Pension (whether from SERPS or from the State Second Pension) is calculated when you claim the basic State Pension. The Pension Service will normally send you the relevant forms and invite you to make a claim about four months before you reach State Pension age. For men this is 65. For women it is currently 60, but will progressively increase from 2010 to 65.