As part of the welfare state, the vast majority of Brits are eligible to receive the State Pension when they reach the state retirement age. The State Pension is a regular payment you can receive after you reach a certain age.

Most people build up some State Pension but the amount you get will depend on your own personal circumstances.

Our guide explains how the Government Old Age Pension Scheme (State Pension) works.

Your retirement income

Once you reach State Pension age, you will receive a regular income for the rest of your life. However, whilst it will give you a reliable amount of money in your retirement, it may not be sufficient for you to maintain your lifestyle. This is why many people also make their own pension provision in the form of private or company pensions.

The State Pension is made up of two parts, the basic State Pension and the additional State Pension. You will receive different amounts of each pension depending on your personal circumstances.

The value of your State Pension

The amount of State Pension you will get depends how many qualifying years of National Insurance contributions you have built up. Qualifying years are built up by you paying National Insurance contributions or having contributions credited to you by the government.

For example, if you are ill or unemployed you may not be able to pay National Insurance contributions and the government may make your National Insurance contributions for you in the form of National Insurance credits.

In 2011/12, a single person can get up to £102.15 a week basic State Pension. Many people receive less than this although others receive more as they receive an additional State Pension (see below). The amount of the state pension generally rises each year.

When you receive your State Pension

You can get your State Pension once you reach your State Pension age. You do not have to claim it straight away, and you can increase the amount you get if you delay claiming it.

For men, the current State Pension age is 65 and for women the current State Pension age is gradually increasing from 60 to 65 between April 2010 and November 2018.

However, the government has published new proposals for increasing the State Pension age to 66 and, of course, there may be further such proposals pushing back the state retirement age before you retire.

The Additional State Pension

The additional State Pension is provided by the government and can enhance the pension that you receive. You can build up an additional State Pension if you are below State Pension age and you are employed (earning over £5,304), claiming Child Benefit for looking after children under the age of 12 or caring for someone.
If you’re an employee with annual earnings above a certain amount (£5,304 in 2011/12) you can choose to ‘contract out’ of the additional State Pension and join a private pension instead. If you have a company pension, your employer should tell you if it is ‘contracted out’.

This means you probably do not build up additional State Pension although you will continue to build up your State Pension as you cannot opt out of this scheme.