State Second Pension (Formerly Graduated Pension)
The Graduated Retirement Benefit was an earnings-related scheme for employees, based on their National Insurance Contributions (NICs). It was replaced by the State Earnings Related Pension Scheme (SERPS) and then, in 2002, by the State Second Pension (S2P).
Paid in addition to the Basic State Pension, this aims to provide a more generous Additional Pension for low earners, carers and people with a long-term illness or disability by basing the entitlement on earnings on which Class 1 NICs have been, or are treated as having been, paid.
All employees have to contribute to their Additional Pensions, unless they contract out of S2P and make alternative arrangements such as an occupational or personal pension scheme.
What is my State Pension age?
Your State Pension age, which is the earliest point at which you can draw your State Pension, depends on your date of birth. Given that we are all living longer, the government has decided to increase the age at which we can start receiving a pension from the state.
The increase in the age you can start receiving your pension is being phased in with women being brought into line with men. The Coalition government has sped up the process for women which has led to accusations that women in their mid to late fifties are being treated unfairly as they will have hardly any time to save to make up for not receiving a pension at 60.
However, for anyone retiring between now and 2018, the pension age is likely to be 65 - whether you are male or female. It is then set to rise further so that if you are due to retire between November 2018 and 2020, your state pension age will be 66, and if you retire between 2034 and 2036 your state pension age will be 67. Anyone retiring between 2044 and 2046 will have to wait until they are 68 to claim the State Pension.
None of this is set in stone as there is still a debate ranging between politicians and consumer bodies about how far and how fast the state pension age should rise.
How do the years I have worked affect my pension?
Anyone reaching the State Pension Age after 6 April 2010 will need to have worked and paid NI contributions for 30 years to qualify for the full Basic State Pension. This is a reduction on the previous requirement of 39 years for women and 44 years for men.
If you have less than 30 qualifying years on your record, the amount you receive will fall accordingly. However, you can top-up your NI contributions to give you 30 qualifying years, but this normally has to be done within six years of the tax year in question.
Home Responsibilities Protection (HRP), which aimed to protect the pension entitlements of those caring for children or disabled relatives and was automatically awarded to those receiving certain benefits, was replaced by a National Insurance credit system on 6 April 2010. However, it still applies to anyone who reached their State Pension Age prior to that date.
For anyone who has retired since, or is yet to retire, credits are now available for any full year in which they are a carer for a foster child or disabled person, receive child benefit for a child under 12 or, from April 2011, look after a grandchild under 12 years of age.
Otherwise, if you have 23 qualifying years, you will get 23/30th of the full amount. For just one qualifying year, you will get 1/30th. Spouses and civil partners who have not paid sufficient contributions may also now receive a pension based on their partners' contributions. This could amount to 60% of the working partner's entitlement.
