State Pensions

 

The state provides basic pension provision to prevent poverty in old age. Men over 65 and women over 60 are entitled to claim. From 2010, the state pension age for women will start to rise from 60, eventually reaching 65 by 2020.

 

Basic State Pension

 

Qualification for Basic state pension is based on National Insurance contribution history. For someone with the full number of qualifying years, it is payable at a flat rate of £87.30 per week (2007/08). A lower amount of money is payable for someone with fewer qualifying years. Dependents additions are also payable - where the dependent does not qualify for State Pension in their own right or where they have not yet reached State Pension Age.

 

 

 

Additional Pension

 

This has been available only to employees paying National Insurance and certain exempted groups (not including the self employed). Qualification is based on payment of a number of fixed National Insurance payments.

 

State Earnings-Related Pension Scheme (SERPS)

 

From 6th April 1978 to 5th April 2002. Qualification based on band earnings above a Lower Earnings Limit (LEL) in each year. The LEL (£84 per week /£4368 pa in 2006/07) is usually set at the same level as the BSP (£84.25) and increases when it does. Band earnings lie between the LEL and an Upper Earnings Limit (UEL) at which National Insurance contributions cease to be payable by the employee (£645 per week/£2,795 per month in 2006/07). The UEL is also adjusted annually.

 

State Second Pension (S2P)

 

From 6th April 2002 onwards. S2P is designed to provide a more generous additional pension for low and moderate earners, people with long- term disabilities and certain carers.  The rebate will be twice that available from SERPS for those earning up to £13,000.00, (Lower Earnings Threshold in 2007/08).  For those earning between £13,000.00 and up to £34,840.00 (Higher Earnings Threshold in 2007/08) the rebate will be higher than previously available from SERPS.  Entitlement for those earning more than the Higher Earnings Threshold will be unchanged.

 

Tax advantages

 

Growth free from capital gains tax, corporation tax and income tax.

 

 
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