The government currently provides the basic State Pension to those at State Pension age. It also provides an additional State Pension and Pension Credit for those that qualify.
Basic State Pension You are entitled to the basic state pension when you reach the required State Pension age. This is currently between the ages of 60 and 65, and depends on your gender and date of birth. Due to recent changes, you will need to visit the Direct Gov website to find out your qualifying age.
The amount you can receive depends on your National Insurance contribution history. As of April 2012, the full basic State Pension is £107.45 per week for a single person.
Additional State Pension Some people will also be entitled to an additional State Pension. Up until April 2002 it was called the State Earnings-Related Pension Scheme (SERPS). Then it changed to the State Second Pension (S2P).
The amount is based on individual circumstances so it is best to visit the Additional State Pension page on the Direct Gov website to find out whether you qualify.
Pension Credit Another state-provided benefit that you may have heard of is Pension Credit. It is intended to bring an individual's income up to a minimum level and is paid in two parts: Guarantee Credit and Savings Credit. To find out if you may be eligible visit the Pension Credit page on the Direct Gov website.
The Direct Gov website has a wealth of information about other benefits you may be entitled to so it really is worth your while to take a good look.
Tax and your retirement income Retirement income is taxable so it is worth checking the HMRC website to assess the impact of tax on your pension.
For most people, the State Pension will provide one element of their income in retirement, usually supplemented by personal or occupational pensions and possibly income from savings and other assets. Those continuing to work and drawing a pension can add a salary to their list of sources of income.
All of these need to be taken into account when working out what you have, or what you think you will need in retirement.
The Citizens Advice Bureau may be a useful source of information with regards to your state entitlements. You may also decide to get advice from a financial adviser, if so you can use the website Unbiased.co.uk to find one local to you.
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