The following covers the main sources of accumulating a pension for your retirement.

Your National Insurance contributions (NICs) go towards building up a basic State Pension

The State Pension age is currently 65 for men and between 60 and 65 for women depending on when you were born. It will increase gradually to age 68 in the future.

The amount of State Pension you get is based on the amount of NICs you have paid. You may not even get a pension if you’ve paid less than the minimum though this may change in the future.

In some cases you may be credited with NICs if you are not working. Your local social security office can tell you if you are entitled to credits. Or you can choose to pay voluntary contributions.

If you are (or have been) in employment, you may also be building up an additional State Pension – the State Second Pension, formerly SERPS (State Earnings Related Pensions Scheme).
The amount of State Second Pension you get depends on your earnings and your NICs record. You may also be entitled to some Second State Pension if:

• you earn below a certain amount set by government; or
• cannot work through long-term illness or disability; or
• you are a carer.

Self-employed people cannot build up a pension through the State Second Pension.

There may be changes to the State Second Pension in future.

These are available through employers and there are 2 types known as defined benefit or final salary schemes, and defined contribution or money purchase schemes. (Read more...)