The State Pension is not the same for everyone, and understanding how much you get can be confusing. Here is how the State Pension works and what it could pay you.
Pensions are long term investments. You may get back less than you originally paid in because your capital is not guaranteed and charges may apply.
You can find out when you will qualify for the State Pension by visiting the GOV.UK website.
The amount you get depends on how long you have been paying National Insurance (NI).
To get the full new State Pension of £175.20 a week, you need to have paid National Insurance for 35 years.
You get about £5 a week* for every year you have paid National Insurance.
If you want to know exactly how much State Pension you could get, contact the Department for Works and Pensions on 0345 300 0168 or visit the GOV.UK website.
* Calculated using maximum pay out of £175.20 divided by 35 (years) = £5.005, then rounding it up to £5
This is also based on how long you have paid National Insurance, but you may have the option to top up your contributions to qualify for the maximum amount.
To get the full basic State Pension of £134.25 a week, you need to have paid National Insurance for 30 years.
You may also qualify for the Additional State Pension on top of your basic State Pension. Find out more on the GOV.UK website.
If you work for someone as an employee you may need to pay class 1 National Insurance depending on how much you earn, for example:
|Weekly pay||NI rate|
|£183 to £962||12%|
|Over £ £962||2%|
You will pay either class 2 or class 4 contributions which you pay through your self assessment form at the end of the tax year.
The amount you contribute depends on your profits for the year:
Class 2: Profits over £ £6,475 a year, you pay £3.05 a week.
Class 4: Profits over £9,501 a year, 9% on profits between £9,501 and £50,000; 2% on profits over £50,000
This depends on your type of employment:
If you are employed, your employer is responsible for paying National Insurance to HMRC on your behalf.
If you are self employed then you are responsible for declaring your income and paying National Insurance.
Your National insurance is paid to HMRC and gives you a State Pension when you reach your pension age.
If you did not pay enough National Insurance over the last six years, you can usually pay a lump sum to make up the difference.
Find out more on topping up your National Insurance contributions on the GOV.UK website.
As well as paying for your State Pension, it also goes towards other benefits such as:
For more information on National Insurance visit the GOV.UK. Website.
When you reach your State Pension age. Here are your pension withdrawal options.
Alternatively, you could defer your State Pension if you do not need the income straight away.
The longer you leave it, the bigger your State Pension income will be. Find out more here.
You can help ensure you have the retirement you want by finding the best personal pension plan to make your money work as hard as it can.