State Pension

The State Retirement Pension can come in many parts, including part that is related to your past earnings.

Your entitlement will depend on your National Insurance contribution history, so you cannot assume that you will automatically get a full pension.

Your State Pension can be made up of Graduated Pension, State Earnings Related Pension (SERPS), State Second Pension (S2P), and in some cases a supplement in respect of contracted out employment. Sometimes there is also also a top up related to your family circumstances.

It is now possible to defer taking your State Pension in exchange for a bigger pension later. Or instead of a bigger pension, you may choose to take a taxable lump sum.

An estimate of the pension that you can expect can be obtained from the pensions service on www.thepensionservice.gov.uk

If you can afford to make savings into a pension scheme yourself, this is likely to be to your advantage. Even with the maximum possible earnings related supplements in the State scheme, your retirement income will be very much lower than the earnings you had while you were employed.

And remember, although by the time you retire you will have planned to have your debts paid off, you will have more leisure time. This means you are likely to continue to need significant income if you are to enjoy retirement.

For further advice on State pensions, contact us.

For further information on general pension planning issues, see Individual Pensions.