Benefits

7. Retirement

The Pension Service

DWP set up the Pension Service to deal with the State pension and other pension-related benefits. If you have reached, or are nearing, State pension age, the Pension Service will write to you and give you a phone number to call for information. Your queries will usually be dealt with over the phone or by post, but the service can arrange for someone to visit you at home, if necessary. For more information see 'Other useful organisations' at the end of this page.

State pension

A State pension is paid to people who reach State pension age if they have made sufficient National insurance contributions. It is taxable. The State pension age for men is currently 65. The State pension age for women born on or before 5 April 1950 is 60. The pension age for men and women is gradually rising so that by 2020 it will be 66. After that it will rise to 68 for both men and women.

People who do not have sufficient contributions may receive a reduced State pension or no pension at all. Under the previous rules, women and widowed people, divorced people, civil partners and same sex spouses who did not have sufficient contributions of their own were able to claim on the contributions of their partner or former partner. From April 2016 this will no longer be possible.

People may also qualify for extra pension for a number of reasons. People over 80 who do not qualify for a State pension or full State pension may be eligible for an over-80s pension, which does not depend on National insurance contributions.

You can claim your pension if you are still working. However, if you want to, you can defer your pension and then draw a higher weekly pension when you do claim it.

If you are entitled to a State pension, the Pension Service should contact you about four months before you reach State pension age. If you have not heard anything three months before reaching State pension age, contact your social security office or the Pension Service claims line (see 'Other useful organisations').

There is going to be a new State pension from April 2016, but only for people who reach State pension age on or after April 2016. The basic pension will be set at a higher level for these new retirees, but they will need a longer National insurance record of their own, and certain other pension additions will be phased out.

If you are below State pension age but unable to work, you may be able to protect your State pension rights by getting National insurance contribution credits. These are automatically given to people receiving certain benefits, such as Incapacity benefit, Employment and support allowance and Carer's allowance. Alternatively, carers who do not receive these benefits may be able to protect their rights through a weekly carers credit to build up their State pension entitlement. This scheme replaces the Home responsibilities protection scheme and may make a considerable difference to your State pension. Previous protection built up under the Home responsibilities protection scheme will be incorporated into the new system. If you think you may be eligible, seek advice.

Pension credit

If you are unable to claim the State pension, or it is not enough for you to live on, you may be entitled to claim other benefits, such as Pension credit.

The age at which men and women are eligible to claim Pension credit will increase in line with the changes in the State pension age for women (see 'State pension' above). Pension credit is a means-tested benefit. It has two parts: Guarantee credit and Savings credit.

Guarantee pension credit works by topping up a person's income if they are on a low income. Savings credit is extra money for people aged 65 and over who have an income level above the basic retirement pension level, or who have savings or investments. No new claims for Savings credit will be taken from April 2016, but people who already receive it will continue to do so.

Some people are entitled to both the Guarantee and Savings credits, while others are entitled to one or the other. People eligible for Pension credit may also qualify for other benefits such as help with housing costs, and NHS costs.