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If you’ve not enrolled in a personal, stakeholder or company pension plan, it’s very likely that you will only receive the State Pension when you retire. The State Pension is provided by the government to make sure that you have some form of income for your retirement. It is basically made up of the National Insurance contributions that you have made throughout your working life.
Because people are living longer in the UK the retirement age is due to increase for many of us in the near future. There are different elements relating to the State Pension. Most people will qualify for the Basic State Pension. For example a married woman who has not earned enough National Insurance by her retirement, she may have to rely on her husband's contributions in order to qualify for a Basic State Pension of her own.
There is a lot of talk about the financial implications of living on the Basic State Pension alone. The rising cost of everyday living means pensioners experience difficulties sustaining a proper lifestyle. Currently the average amount per week is £90.70. This may be a higher or lower amount depending on individual circumstances. The good news is that the State Pension is reviewed annually and may be increased if the Government restores these increases to the equivalent in national average earnings in 2012 and not, as is the case just now, with the Retail Prices index (RPI).
It is also possible to qualify for the State Second Pension, or S2P. This is an earnings related pension paid in addition to the Basic State Pension that depends on how much Class 1 National Insurance contributions you’ve made. The S2P does not apply to people who’re self employed.
And for those of you who decide to retire to sunnier climes in your retirement, you’ll be pleased to hear that your State Pension could still be paid to you depending on which country you move to. If it’s a European Economic Area (EEA) country, then there’ll be no issues. Check the Directgov website for more details.
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