State Pension
At present, the
State will provide you with a pension in retirement if you pay (or are
treated as having paid) National
Insurance contributions.
You cannot leave the basic State pension.
It is not an invested scheme: this means that the
workforce paying into the pension pot now, are funding the people
currently receiving pensions.
Demographics clearly show that with an ageing population, life expectancy
in retirement increasing and a decreasing workforce contributing to the
pension pot, the cost of providing pensions for all is unlikely to be
sustainable.
It is therefore vital that each
of us does not rely on the State pension for our retirement planning but
plan for our own retirement through a stakeholder, personal or company
pension.
You can get your State
Pension when you reach State Pension age. The State Pension
age is currently 65 for men and 60 for women. However, the
State Pension age for women is changing - it will rise
gradually from age 60 to 65 from 2010 to 2020.
From 6 April 2020, the State Pension age for
both men and women will be 65.
The State Pension
age for both men and women is set to increase from 65 to 68
between 2024 and 2046, with each change phased in over two
consecutive years in each decade. The first increase, from
65 to 66, will be phased in between April 2024 and April
2026; the second, from 66 to 67, will be phased in between
April 2034 and April 2036; and the third, from 67 to 68,
between April 2044 and April 2046.
How much can I invest ?
The amount invested will depend on
your National Insurance contributions and the number of years you have been
contributing.
You are able to request a forecast
of how much your State pension is likely to be. If you have missed years, you
may be able to reinstate them by making a suitable payment.
Bates can advise you if you would like details on
how to obtain this information.
How much will I get?
The old age pension is currently £90.70
per week for a single person and £145.05 per week for a
married couple (2008/2009).
These pensions are taxable (as though earned income)
although no NI charge is applicable.
To receive the full state pension you
must have contributed for 30 years. For people close to pension age the
older calculations apply: approximately 90% of the maximum amount
of years possible. Given a maximum of 49 years: this requires
contributions of 44 years for both men and women (or 39 years for women
who will retire before 2010).
Second State Pension (S2P)
This is the Governments' additional state pension,
which took over from SERPS ("State Earnings-Related Pension
Scheme") in April 2002.
It is based on your record of National Insurance
contributions and your level of earnings as an employee. It does not
presently cover
self-employed individuals.
How much can I invest ?
There is currently no arrangement for you to pay extra
contributions into S2P.
You are automatically a member of this scheme if
employed and earning above the lower threshold limit. You are able to
leave this scheme if you so wish and join a private or stakeholder scheme.
This is called contracting-out. The private or Stakeholder scheme collects
contributions from Government in lieu of your benefit into the S2P.
The decision as to whether or not to contract-out is a
complex one and the solution differs from person to person. Call your
Bates consultant to find out more.
How much will I get?
The amount you ultimately receive is dependent upon complex
rules and the earnings of the member. For detailed up-to-date advice on
State Pensions topics we recommend the Pensions Advisory Service (TPAS).
 
|
