The State retirement scheme is for people who have reached state pension age. It is based on the previous payment of National insurance contributions.

From 6th. April 2020 the state pension age for women will be 65, the same as for men. Women's state pension age will start to change gradually from 2010.

This will not affect women born before 6th. April 1950, who can still claim their state pension at 60.

Women born on or after 6th. April 1955 will have a state pension age of 65.

Have you:
Paid or been credited with National Insurance Contributions, or has your husband or wife?
Reached the age of 65(men) or 60(women)?

If 'yes', to both you should be able to claim it.

The Retirement pension is made up of:

Basic Pension (based on how many NI contributions you have paid, or been credited).

Additional Pension (paid from the State Earnings Related Pension Scheme - SERPS, (based on your earnings as an employee from 6th. April 1978.) Note that from 6th. April 1997, you will have earned the additional pension only if you have paid the standard rate 'contracted-in' contributions as an employee.

Graduated Retirement Benefit (based on any graduated NI contributions you paid between April 1961 and April 1975).

Invalidity Addition (paid if you had an invalidity allowance, shortly before you reached state pension age)

Age addition (paid to anyone aged 80 or over)

Dependant's Pension (if you or your husband/wife are responsible for any children, or if someone else looks after them for you.)

Occupational pensions are also known as 'works' pensions, 'company' pensions and 'superannuation' schemes. They are provided by employers and aim to provide an additional pension to the state scheme, so that it may provide for a more secure retirement.

It is not possible to give a guide, as it will depend on the progress of the pension scheme and also the contributions that you have made to it. If you are not already doing so, it is often a good idea to think about paying in to it.

Occupational pensions can be paid, in addition to your state pension. However some occupational schemes may affect the inclusion of any state 'additional pension' you may have earned under the State-Earnings Related Pension Scheme or 'SERPS'.

If you are not already contributing to your employer's scheme, you may wish to consider doing so. This is often the most 'cost effective' way of contributing, as the scheme is already in existence.

Some employers' schemes express the projected retirement benefit as a fraction of 'final year's'salary, whilst others schemes may refer to future 'fund performance'. The final salary scheme is based on the fraction that the time employed bears to the maximum. Therefore if a scheme is expressed in so many 60th's, 10 years service will produce a fraction of 10/60th.'s of final salary, to be payable as a pension. Where a final salary of £30,000 is achieved, an annual pension of 10/60 x £30,000, or just £5,000 p.a. will be payable.

The performance of the scheme which is based on future fund performance will depend upon the contributions made and the overall fund performance.

By making regular contributions to your employer's scheme, this will add to those pension benefits. You may also make extra or 'additional voluntary contributions' (or 'AVC's') to your employer's scheme. After making AVC's to your employer's scheme, there are still other schemes, which you could use to contribute independently of your employer's scheme.

You cannot usually pay into an occupational pension scheme and a personal pension scheme at the same time.

Personal pensions are also known as private pensions. They are provided by pensions companies, life offices, and investment houses and they are intended to give a 'second' pension which is in addition to the State Scheme, to help provide a secure retirement.

As the contributions are accumulated and invested, it is not possible to give a precise guide, however illustrations can be produced which are based on a selected level of contribution over a pre-determined period of time. This projects a gross fund value, from which are then deducted the expenses and charges of the selected pension provider. The resultant net fund value (after expenses) is then projected at three assumed rates of growth (as laid down by the Personal Investment Authority), to provide an anticipation of the likely pension payable, but pre-supposing that the contribution level is maintained throughout.

No! Personal pension benefits can be paid, in addition to your state pension. The benefits can be taken at any age from between 50 upto 75 years of age. A pension becomes payable, regardless of whether or not paid employment continues after 'retirement'. An individual can contribute to more than one personal pension at any one time.

You cannot pay into a personal pension scheme and an occupational pension scheme at the same time. Therefore it is best to wait and see what the employer's scheme has to offer, before committing yourself. A personal pension plan once started will incur set up costs; these costs are paid for by deductions from the early year's premiums. If the plan is stopped soon after commencement, what remains of the premiums will be little or nothing. The resulting fund value will not support a worthwhile pension.

Pension providers, employ 'fund managers' to invest the premiums. These fund managers are paid by deductions from the accumulated pension funds. In addition to the fund managers salaries, the pension provider also incurs (as does every business) overhead expenses. To recover the salaries and overheads the provider will impose 'initial' charges and 'annual management' charges on all the funds, which they manage. The lower the cost of charges, all things being equal there is a potential of better growth of the funds 'under management'.

On the other hand, it could be argued that if the costs are kept too low thereby restricting the fund manager's salaries, this will attract a lower calibre of staff, and that consequently the funds may be more likely to under perform as a result. However even with the highest calibre of staff, which most providers employ, external economic factors are beyond their control.

A provider, which combines good financial strength, and the ability to maintain competitive future bonuses, with a consistent good past performance, is a good starting point in the selection of pension providers.

As past performance is not necessarily a guide to the future, to make an assessment of the leading pension providers, expert advice is available to us from a leading firm of Independent Actuaries. As the whole question of pensions is a complex one, please contact us for advice before making any decisions.

The Government has introduced a green paper on Welfare Reform which includes proposals to introduce a 'Stakeholder Pension' to support individual pension provision from April 2001. They are particularly designed to help those on middle incomes of between £9,000 - £18,500 per annum, and may also benefit those on higher incomes.

Stakeholder Pensions will be offered by the private sector pension providers, but must comply with the Government's rules. They are expected to provide low cost, flexible and secure pension arrangements. The minimum contribution to a Stakeholder Pension is likely to be £20.00 per month.

Subject to some exclusions, any employer with more than 5 employees is bound to offer a Stakeholder scheme to their staff.

As the Stakeholder Pension is not available until April 2001, if you require further information, or if you are wondering what is best to do now to start a pension for yourself or your staff, please contact us.