As well as the basic State Pension, you may qualify for an additional pension from the State. This will increase the overall amount you receive from the State when you retire.
This scheme is called the State Second Pension and was introduced in April 2002. Before that it was known as the State Earnings Related Pension Scheme (before that there was another scheme called the State Graduated Pension)!
How do I know if I qualify for it?
You may not qualify for an additional State Pension for any year when you were:
- Earning less than £5,668 a year (2013-14).
- Unemployed (or a student)
- Self employed
And you won’t qualify if you were ‘contracted out’ of the scheme.
‘Contracted out’ means that you have opted out of the additional State Pension so you will no longer build up benefits in the scheme (though there some instances where you will still be entitled to part of the additional State Pension). This is a complex area and changes introduced from 6 April 2012 abolished contracting out in defined contribution schemes.
There is also a government consultation process planned that could abolish contracting out for defined benefit schemes at some point in the future.
The State Second Pension may also be available to certain people caring for children or the disabled. And if you’re ill or disabled you may also be able to build up benefits.
How much is it worth?
This is a difficult question to answer simply. It depends not only on how many years you’ve contributed, but also your earnings. To make it even more difficult, the State Second Pension is calculated differently from its predecessor: The State Earnings Related Pension. Most people will have benefits under both.
So how can you find out what your additional state pension might be worth?
According to the Department of Work and Pensions, the average additional state pension being paid in March 2011 was £27.75 per week. You could use this as a proxy for the amount you may receive, but if you want a more accurate forecast:
- You can work it out yourself. This is very difficult, but here’s more information.
- You can contact The Pension Service for a State Pension forecast on 0800 731 7898
How do I get my state pension?
You must make sure you claim your additional State pension. In most cases, it will not automatically be paid when you reach State Pension Age. You will receive a letter from The Pension Service about 4 months before State Pension Age. This will tell you how to claim your benefits.
If you haven’t received this 3 months before you reach State Pension Age, get in touch with The Pension Service on this number: 0800 731 7898
The Government has announced its intention to introduce a new flat rate universal State Pension from 2016. For further information click here.
For information about the annual increases in State Pensions please read more here.