A pension is a fund in which a sum of money is added during a worker's employment years and from which payments are made to the person after retirement from work. There are three major types of pension schemes in the United Kingdom. These are State Pensions, Occupational Pensions and Individual Pensions.
This article will be focusing on the State Pension Scheme in the United Kingdom. The State Pension is a regular income paid by the UK government to people who have reached the state pension age. The state pension age or retirement age at which you can start receiving your state pension is 65 years for men and 60 years for women- although there is no longer a forced retirement at this age.
The state pension depends on the persons’ National Insurance (NI) contributions. If a person has paid NI contributions up to 30 years, he will be paid a pension of £119.30 a week, up to April 2016. He needs to have paid NI contributions for 35 years to be paid the new full state pension from 6 April 2016 which is £155.65 per week. This is approximately £620 a month. If a person has fewer contribution years, he will be paid a smaller pro-rata pension. For example, if you have made NI contributions for 20 years, you will be paid two thirds of the maximum amount. Receiving a state pension is not dependent on whether you are married or not. For more on how state pensions work, click here.
The state pension is paid to enable people who have a basic amount of money to support themselves in their old age. The retirement age will be increased to 65 years for both men and women by 2018, and will be increased to 66 years by 2020. Your state pension will be increased, if you defer your state pension by one or by several years. The increase in pension due to referral is about 5.8% per year from 6 April 2016 for those who reach retirement age on or after that date. If you have more information on state pensions, please do not hesitate to comment below.