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Financial > Pensions > State Pension
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In general terms the State pension comes in three different layers:
1) the basic State pension
2) the State second tier pension,
formerly known as the State Earnings Related Pension (SERPS) which in turn was formerly known as the Graduated Pension . . . and
3) Pension credit
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What you receive as a basic State pension is directly related to your National Insurance record.
The State retirement age is being standardised so that it will be 65 for everyone by the year 2020 but until then there is a phased approach that sees women being able to retire at age 60 today and this progressively rises to match the normal age for men. It is probable that the joint age will quickly move to 68 once a single retirement age has been achieved for everyone in the UK.
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A woman can currently receive the full basic State pension if she has 39 complete years of paying National Insurance contributions (note, this is not the reduced married women's rate but the full rate of National Insurance) but this will rise progressively until it matches the male requirement of 44 years.
Please note that the joint requirement reduces to 30 years of National Insurance contributions in April 2010 for both men and women.
If you cannot build up more than 10 years before your State retirement age you will not qualify for any basic State pension in your own name, and you may be able entitled to a small pension when your husband, wife or registered civil partner reaches their State retirement age by virtue of the National Insurance contributions that they paid.
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The second layer of the State pension does not apply to the self-employed, but in essence, some of the National Insurance contributions paid by you and your employer are supposed to entitle you to increased weekly pension at the State retirement age.
No reserve has been set aside by the government to meet these obligations and, with inescapable changes to the age profile of the population looming, there must be grave doubt that this part of the State pension will be paid to anyone except those with no assets of their own and no private pension income beyond the year 2015.
Please contact Corrigans to discuss the impact that this may have upon you.
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The third layer of the State pension is effectively a means tested benefit - because it is only payable to those people who have insufficient private income in retirement to meet a minimum threshold set by the government from time to time.
It is really important to remember that this is unlikely to be a permanent feature because it effectively imposes a tax of 100% upon anyone with a small pension scheme. What happens in practice is that the pension credit is reduced by £1 per week for every £1 of weekly benefit that any one is entitled to from their own pension schemes. This clearly encourages no one to save for their retirement and so it is likely to be a casualty in the next wholesale review on the topic of pensions by this or any subsequent government.
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