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Your quick guide to the State Pension

The key questions - answered

Important: This information is not personal advice. If you are unsure how to proceed please seek advice. Any amounts referred to are for the 2018/19 tax year. Tax and pension rules can change and benefits depend on personal circumstances. Investments can fall as well as rise in value so you could get back less than you invest.

How the State Pension works

The State Pension is a vital source of income for many people in their retirement.

Once you reach ‘State Pension Age’, the government pays you a guaranteed income for the rest of your life based on your National Insurance record.

You don’t get it automatically - you have to claim it. You should get a letter four months before you reach State Pension Age, telling you what to do. If you’ve been employed for most of your working life, you should qualify.

You don’t have to start receiving payments straight away, you can choose to defer for as long as you want and receive an increase as a result.

Tom McPhail explains the State Pension in four short videos

Will I get a State Pension?
When will I receive my State Pension?
How much State Pension will I receive?
What do I need to know about the State Pension?

Frequently asked questions

One question to ask yourself

While the State Pension may be the main source of retirement income for many, it’s unlikely to give you all the income you need for the retirement of your dreams.

The new State Pension is £164.35 per week, which is £8,546.20 each year.

Could you live comfortably on this amount? Or would your standard of living be affected?

If you’re not sure, you can try our free tools, which should help:

Budget planner

Pension calculator

Boost your retirement savings

Pensions are one of the most tax-efficient ways of saving for retirement. If you want to have more than the State Pension in retirement, you could boost your savings, and receive tax relief, by contributing to a pension.

Most people can receive up to 45% pension tax relief for this tax year (2018/2019) when making a contribution to a pension, such as our Self-Invested Personal Pension (SIPP). Basic, higher and top-rate taxpayers can benefit: the higher your rate of tax, the more you could receive, as tax benefits depend on personal circumstances. If you’re a Scottish taxpayer the amount of tax relief you can claim is different. Take a look at our information on the Scottish income tax changes page. Remember that rules can change. As you’re investing for retirement with a pension, you can’t usually access your money until age 55 (rising to 57 from 2028).

For example:

  • You contribute £8,000 into your pension.
  • The government adds £2,000, to make a total investment of £10,000.
  • Higher and top-rate taxpayers can then claim back even more via their tax return. £10,000 in a pension could therefore effectively cost a 40% rate taxpayer as little as £6,000 and a 45% rate taxpayer as little as £5,500.