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General questions about Pensions and retirement
Your State Pension is dependent upon your National Insurance Contribution history.
If you would like to know the amount of pension you can expect to receive from the State, you should request a forecast:
- Online at https://secure.thepensionservice.gov.uk/statepensionforecast/
- By telephone: 0845 3000 168
- By Post by downloading form BR19 (click here to download) and posting to:
State Pension Forecasting Team
Future Pension Centre
Tyneview Park
Whitley Road
Newcastle upon Tyne
NE98 1BA
Claiming State Benefits may provide you with additional income, or assistance with your current costs of living, and negate the need to raise capital and/or income from your pension or other means.
If any of the following apply to you, you may be entitled to receive benefits:
- you're on a low income (employed or looking for work)
- you have dependent children
- you're ill or disabled
- you're caring for someone
- you're aged 60 or over
- you have been bereaved
- you're pregnant or have recently had a baby
Benefits advice if you are of working age
If you are of working age, you can contact Jobcentre Plus. Whether you are already working or are looking for work, the staff there will be able to tell you about any benefits you can claim. You can find the contact details for Jobcentre Plus in the phone book or by visiting the Jobcentre Plus website.
You can check whether you may qualify to receive financial or other support by using the DirectGov online benefit adviser at:
The Direct Gov website also contains useful guides to how the benefit system works, and useful contacts.
Currently, State Pension age is 65 for men and 60 for women. However, from 2010 onwards this is changing.
To find out when you can expect to receive your State Pension, you should use the direct.gov.uk State Pension age calculator, available at:
http://pensions.direct.gov.uk/en/state-pension-age-calculator/home.asp
Pensions are long-term investments with special tax rules – for example, you get tax relief on contributions.
A personal pension is one that you take out yourself, for example if you're self-employed or your employer doesn't offer a pension arrangement. They are a type of money purchase pension.
The fund builds up using your contributions, investment returns and tax relief. It helps to think of money purchase pensions as having two stages:
Stage 1
The value of the policy builds up using your contributions, investment returns and tax relief.
Stage 2
When you retire, you can take a tax-free lump sum from your fund and use the rest to secure an income – usually in the form of a lifetime annuity.
The amount of pension income you'll get will depend on:
- how much you pay into the fund;
- how much, if anything, your employer pays in;
- how well your investments have performed;
- what charges have been taken out of your fund by your pension provider;
- how much you take as a tax-free lump sum;
- annuity rates at the time you retire; and
- the type of annuity you choose.
For a Personal Pension Tax free cash is 25% of the fund.
Final-salary or defined-benefit schemes are offered by some employers and provide largely guaranteed benefits at a pre-determined age and are not heavily reliant on investment performance.
The amount of pension you can expect to receive at retirement is based on:
- your pensionable earnings;
- the number of years you have been a member of the scheme; and
- the proportion of those earnings you receive as a pension for each year of membership (called the accrual rate). The most common accrual rates are 1/60th or 1/80th of your pensionable earnings for each year of pensionable service.
The benefits of these schemes are that:
- your pension benefits are linked to your salary while you are working, so they automatically increase as your pay rises;
- your pension entitlement is not dependent on the performance of the stockmarket or other investments;
- the pension scheme will normally increase your pension income each year in line with the Retail Prices Index (RPI) or a set percentage, whichever is the lower.
The scheme is run by trustees who look after scheme members’ interests.
If you cease working for the employer you cannot continue to accrue benefits within the scheme. Your benefits remain within the employer's scheme and become payable at normal retirement age (as defined in the scheme rules). This is known as a preserved or deferred pension. Alternatively you may wish to transfer it to your new employer or an alternative pension arrangement, but there are risks and costs associated to that. We are here to provide advice if you are thinking of transferring your pension.
Your employer is responsible for ensuring there is enough money at the time you retire to pay you the pension. However your benefits are not fully guaranteed if your employer becomes insolvent.
The government has established the Pension Protection Fund to provide protection for members of salary-related schemes. Click here for more details.