Pension Planning - Graduated Pension

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Graduated Pension

A Graduated Pension scheme is a simple earnings related scheme for employees, where the National Insurance contributions that you paid were related to your income. These contributions were divided into units that are worth a certain amount. The most graduated pension you are able to receive is £328 a year for women and £392, for a man.

Working life and State Pension age

Currently the state pension age for men is 65 and 60 for women, however for those women born after March 5 1955, their state pension age will also be 65. Women who were born between 6th April 1950 and 5th March 1995 are affected by the transitional period in which women's pension age slowly rises.

Their state pension is calculated according to the rule; pension age is 60 adding all the months that your that your birth date falls after 5th April 1950.

'Working life' is a term referred to the start of the tax year when you reach 16 to the last tax year before you reach State pension age. The normal working life consists of 49 years, if your state pension age is 65.

National Insurance Contributions

The entire National Insurance Contribution does not go towards the building up of a state pension. To meet the criteria for the full basic state pension, the right type of national insurance contributions need to have been paid for at least nine tenths of your working life.

Contributions paid for less than a quarter of your working life results in no basic pension at all, and anything in between qualifies you for a reduced rate basic pension.

Home Responsibilities Protection can be claimed if you have not been working or paying contributions due to caring responsibilities, therefore you need fewer years in order to qualify for a given rate of basic pension.

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