What is the State Pension?

9 Dec 2023

The State Pension is a regular payment from the government to people who have reached State Pension age. It forms a crucial part of retirement income for many, providing a stable financial foundation for those who qualify.

When Can You Receive the State Pension?

You are eligible to receive the State Pension when you reach the State Pension age, which is currently 66 for both men and women. However, it's important to note that the State Pension age is set to increase in the future. Check your specific State Pension age on the Gov.uk website.

Types of State Pension

Since 2016, the State Pension has been divided into two types: the new State Pension and the basic State Pension. Your eligibility depends on when you reach State Pension age.

  • New State Pension: For women born on or after 6 April 1953, and men born on or after 6 April 1951.

  • Basic State Pension: For women born before 6 April 1953, and men born before 6 April 1951.

How Is Your State Pension Calculated?

Your State Pension amount is determined by your National Insurance (NI) contributions over the years. These could be contributions made during employment, claimed as credits while receiving certain benefits, or even made voluntarily. The total number of qualifying years needed varies based on the type of State Pension you are eligible for.

  • Basic State Pension: To receive a full pension (£169.50 per week in 2024/25), you need at least 30 qualifying years of NI contributions.

  • New State Pension: A full pension amounts to £221.20 per week in 2024/25, and you need 35 qualifying years. If you have between 10 and 35 years, you'll receive a fraction of the full rate.

Claiming Your State Pension

Remember, your State Pension will not automatically start; you must claim it. You'll receive an invitation to claim up to four months before you reach State Pension age. You can claim online, by phone, or by post. Delaying your claim can increase your pension amount under certain conditions.

Your State Pension and Taxes

It's essential to know that the State Pension is taxable. It does not have tax already deducted, so it will count towards your tax-free personal allowance.

As you approach retirement, understanding and planning how to claim and maximize your State Pension can significantly benefit your financial security. If you need more information or specific advice, consider contacting the Pension Service or professional advisors.

SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.
SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.
SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.