What is a pension? State pension

How much state pension you get depends on your National Insurance contributions

The basic state pension is a weekly payment from the Government that you receive when you reach state pension age. To qualify for it, you must have paid or been credited with National Insurance Contributions (NICs) and have reached state pension age. The amount you can claim depends on your number of contributing years. 

How much state pension do I get?

The amount you receive depends on your circumstances. Currently, the maximum state pension you can claim as a single person is £113.10 per week. However, this is set to change by 2016, when a flat-rate state pension of £144 a week (at 2012 prices) will be awarded to all qualifying pensioners. For more on this, visit our State pension guide.

You can top up your state pension with voluntary NICs if you have gaps in your record.

In April 2014, it was announced that those retiring before the flat-rate state pension is due to start in April 2016 will be able to gain additional state pension by paying so-called Class 3A voluntary National Insurance contributions between October 2015 and April 2017.

To increase your state pension by £1 per week will cost £890 if you are 65 years old. The maximum you can top up your pension by is £25 per week, which would cost £22,250 at age 65. The cost of topping up falls as your age increases, so for a 70 year old an extra £1 per week costs £779, for a 75 year old it’s £674 and for someone aged 80 it costs £544.

Who’s eligible for state pension?

Currently, the number of qualifying years of NICs you need is 30, but this will increase to 35 in 2016. If you don't have enough qualifying years, you can pay voluntary contributions.

You may not have enough qualifying years because of gaps in your record. These can be caused by unemployment, being ill and not working, taking time off work for childcare or living abroad. Our guide to Retiring abroad has more details.

When can I claim state pension?

The age at which you can claim is currently 65 for men and between 62 and 65 for women, depending on when you were born. By 2018 the state pension age for all women will be 65.

By 2020 it will be 66 for both genders, and it's due to become 67 by 2028. After that, the state pension age is set to be linked to longevity.

State second pension (S2P) and contracting out

If you're employed, you might also be building up a second state pension (S2P), previously known as Serps. This additional state pension is based on your NICs, and how much you can claim in S2P depends on your earnings – it isn't a fixed amount, like the state pension.

You will receive the state second pension automatically, unless you’ve been contracted out of it. Contracting out finished in 2012 and the second state pension will disappear altogether in 2016 when the system moves to a flat-rate state pension.

What is pension credit?

Pension credit makes sure that people over the state pension age have a minimum income. It's split into savings credit and guarantee credit. Savings credit is worth £16.80 a week per person, and guarantee credit tops up your basic state pension to £148.35 a week.

Child benefit and state pension

If you decide to take time off work to raise a young family, you can claim child benefit up until your youngest child's twelfth birthday. During this time, you will get National Insurance credits. If you’re working and claiming child benefit, you could end up building up more NICs than you need. You can transfer these to your partner. For more on benefits, visit our guide, Tax reliefs.

More on this...

Which Ltd is an Introducer Appointed Representative of Which? Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Your home may be repossessed if you do not keep up repayments on your mortgage.