What about my state pension?
There are currently two parts to the state pension arrangements: a Basic State Pension and the State Second Pension (S2P). These are summarised below:
The Basic State Pension
Is a flat-rate amount reviewed each year by the government. If you do not have a full record of National Insurance contributions, this pension may be reduced.
The State Second Pension (S2P)
This replaced the State Earnings Related Pension Scheme (SERPS) in April 2002 and currently builds up at 3 different levels, depending on the level of your earnings. The amount of S2P you earn for any one year depends on:
- Your earnings in that year (and, as a result, the amount of National Insurance contributions you paid).
- The growth in national average earnings in the period up to your state pension age.
- The rules for paying S2P when you reach state pension age.
If you die before you start taking your pension, your husband, wife or registered civil partner may be eligible for half of any S2P you have earned. If you do not leave a husband, wife or civil partner there will be no payment.
You cannot receive your state pension until state pension age. The Government has recently completed a review of the state pension system and concluded that, due to the increase in life expectancy coupled with falling birth rates, state pension age must be increased in order to maintain the state pension system for the future.
The following table shows state pension ages for men and women, depending on your date of birth.
|
Date of Birth
|
State Pension Age - Women
|
State Pension Age - Men
|
|
Before 5 April 1950
|
60
|
65
|
|
6 April 1950 - 5 April 1955
|
Between 60 and 65,
depending on birth date.
|
65
|
|
6 April 1955 - 5 April 1959
|
65
|
|
|
6 April 1959 - 5 April 1978
|
Between 65 and 68, depending on birth date.
|
|
|
After 6 April 1978
|
68
|
|
Further information on state benefits, including how to obtain a forecast of your state pension, please contact the Department for Work and Pensions.
Contracting out
A pension scheme may contract out of part of S2P provided that it can meet certain tests. PACE is contracted out, the actuary having confirmed that PACE can meet the reference scheme test. As a result, you will pay reduced National Insurance contributions. However, you may find that you will still receive some S2P, depending upon your overall income level whilst you were contracted out.
