Basic State Pension
The basic State Pension is set at a maximum of £107.45 per week for the current financial year. To get it, you must have paid or been credited with National Insurance contributions. To get the full basic State Pension you will need 30 qualifying years worth of National Insurance contributions or credits. Anything less than this and you will receive a proportionately lower basic State Pension. You will be entitled to it when you reach the State Pension Age.
If a spouse has not paid enough contributions to get the basic State Pension in their own right, they may be able to obtain a pension based on their partners’ contributions. This could be 60% of their partners’ basic State Pension.
Up until 2002, additional pensions were in the form of State Earnings-Related Pension Scheme (SERPS). After reform in 2002, the additional pension is known as State Second Pension (S2P). This provides additional pension for low earners, carers and those with a disability.
Pension Credit is an income related benefit designed to provide for those with modest incomes who have made savings for their retirement. It is made up of two parts – Guarantee Credit and Income Credit.
Guarantee Credit tops up the weekly amount if it is below £142.70 (for single people) or £217.90 (for couples). To apply for Guarantee Credit you must be over the qualifying age (rising gradually to 65 and then up to 68).
Saving Credit is a reward (and therefore an incentive) for those who have saved money towards their retirement and who have modest income and savings.
There is no tax to pay on any form of Pension Credit.