What is a pension?

» State Pension benefits
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Pensions are long-term investments with special tax rules – for example, for anyone other than high earners, you get full income tax relief (under current tax regulations) on contributions, which makes saving into a pension one of the most effective ways to provide for income during your retirement. For details on tax relief for high earners please see the Plan Guide.

You can’t normally take the benefits from your pension until you reach age 55.

There are also restrictions on how you take your benefits when you do retire, for example, you cannot normally take all your benefits as a cash lump sum.

The aim of a pension is to help you build up a fund which can then be used to provide you with an income for the rest of your life.

State Pension benefits

The government provides state pension benefits which are made up of two different parts and based on National Insurance contributions:

1. The Basic State Pension – which is a flat-rate pension provided to people who have paid enough National Insurance contributions. If you have not paid enough National Insurance contributions, you will receive a reduced level of Basic State Pension. The Basic State Pension is not earnings related. The Basic State Pension, and entitlement to it, is currently being reviewed by the Government.

2. The State Second Pension - this is an additional pension dependant on the amount you earn and the National Insurance contributions you have made.

State Pensions (under current legislation) are currently available from age 65 for men and age 60 for women, however, these minimum ages are increasing gradually. As legislation currently stands, it will increase to age 68 for both men and women. You can check when you will be able to take your State Pension here »

To find out how much your State Pension entitlement might be, you can get a forecast from The Pension Service. Follow this link for more information »

Need more help?

If you require more help with retirement planning – contact an Independent Financial Adviser »