The UK has a population of 70 million and workforce of 29 million people. Some 23 million of these are employed in the private sector and 6 million in public sector. 1.4 million workers are of pensionable age. Number of pensioners in UK is 12 million.
British pensions fall into several divisions -
State Pension age is not the same as retirement age. Retirement age is when you choose to retire, but you can still work after State Pension age. When you reach State Pension age, you can: stop working and get your State Pension, carry on working and get your State Pension as well, carry on working and put off claiming your British State Pension.
The pension age is 60 for women and 65 for men in UK. This is rising to 66 for both sexes by 2020.
A man born in 1956 reaches the State Pension age on 2022 in age 66.
The State Pension in UK is made up of two parts, the basic State Pension and the additional State Pension.
In December 2011 the basic State Pension rate for a single person was £102.15 per week. A millionaire gets the same State Pension. However, there is also an additional Pension Credit, or Minimum Income Guarantee that tops up the pensions of the less wealthy. Those who qualify are guaranteed a weekly minimum £132.60 for a single person and £202.40 for couples. Pensioners in England are eligible for free off-peak travel on local buses.
The additional State Pension is sometimes also known as SERPS (State Earnings-Related Pension Scheme) or the State Second Pension (S2P). You can choose to leave the additional State Pension and join a private pension instead. This is called 'contracting out'. It is not possible to leave the basic State Pension.
The State Pension depends on how long you have worked and the number of qualifying years you have built up from National Insurance contributions.
Basic State Pension. You get a full basic State Pension if you have 30 qualifying years. You do not need any more years. If you have less qualifying years you get less basic State Pension.
Additional State Pension is based on all the years you have paid National Insurance contributions (NICs), inclusive those for the basic State Pension and those you work over 30 qualifying years.
Currently, those aged 80 and over, who do not qualify for a basic State Pension, get a non-contributory pension of £58.50 a week as long as they are residents of UK.
To get State Pension in UK
women need minimum 9, men 10 qualifying years.
Qualifying for a basic State Pension
You earn qualifying years if your salary exceeds £5,304 and your employer pays NI contributions from your gross salary.
If you are self-employed, you pay National Insurance contributions yourself. You pay flat-rate Class 2 contributions at a flat rate of £2.50 a week however much you earn. Class 2 contributions do not normally count towards the additional State Pension, Statutory Sick Pay or Jobseeker's Allowance.
To fill up gaps in qualifying years you can pay voluntary contributions, around 7.50 per week. When and how to pay voluntary National Insurance contributions, read National Insurance contributions top up
The Minimum Income Guarantee is £137.35 a week.
Pension Credit is an income related benefit for pensioners living in UK. Pension Credit consists of two parts, Savings Credit and Guarantee Credit.
Guarantee Credit ensures that every pensioner's retirement income exceeds the Minimum Guarantee set out by the government. The Minimum Guarantee is the minimum amount of money that the state considers you should have to live on. The Minimum Guarantee in 2011 is set at £137.35 a week for single person.
Savings Credit, you can claim sixty pence of Savings Credit for each pound of income you have which falls between the Minimum Guarantee and the State Pension. The Savings Credit can be up to £20 a week for single persons.
Final-salary scheme: guaranteed pension based on earnings at end of your career and length of service.
Career average scheme: guaranteed pension based on your average pay over your career.
Defined contribution scheme: determined by contributions and investment returns. Usually worth less than final-salary pensions.
The median average salary-linked pension that is currently being paid out to a pensioner, is worth £5,800 a year, 480 a month, 107 a week.
At present a “typical” personal pension pot of £30,000 could buy an inflation-proof annual pension income (called an annuity) of £1,115 a year, 93 a month, 21 a week.
More and more gold-plated private pension schemes close to new members and struggle with payouts. Defined benefit occupational British pension scheme, defined contribution or money purchase pension scheme... please give generously.
You do not have to be a British citizen nor resident to get State Pension. You had to work for a proper British employer.