Pension Age

Pension is a regular payment one can receive when one attains to his/her state pension age. National Insurance contribution plays an important role as the basement of this pension. Once one claims for state pension it gives him/her a regular income for the rest of the life.

The state pension consists of two parts the basic state pension and the additional state pension. The amount of state pension depends on the number of qualifying years National Insurance one has.

A state pension forecast gives more detailed information on state pension after reaching to state pension age. A state pension profiler can help planning the retirement plan. But again it should be keep in mind that everything depends on the National Insurance Contribution.

You can get the basic state pension by building enough National Insurance contribution before attaining state pension age. In 2011-2012 one needs to have £5,304 or more of such earnings if one is an employee or £5,315 or more if one is self-employed.

The number of qualifying years depends on age and gender. Such as

Men born before 6 April 1945 usually need 44 qualifying years
Women born before 6 April 1950 usually need 39 qualifying years.
Men born on or after 6 April 1945 need 30 qualifying years.
Women born on or after 6 April 1950 need 30 qualifying years.

From April 2011 basic state pension increases every by the following criteria of which is the highest

Earnings: the average percentage increase in UK wages that year.
Prices: the percentage the cost of living increases by that year.
2.5 per cent

For 2011-12 the basic State Pension will be increased by the Retail Prices Index for September 2010.

In case of additional state pension you can build up this if you are below state pension age and meet the following-

employed and earning over £5,304 (from any one job)
Looking after children under 12 years and claim child benefit.
Passing 20 hours a week by taking care of sick or disabled persons and claiming carer's benefit.
Having certain others benefit due to illness or disabilities.

It does not concern that after being eligible for the state pension you automatically stop paying tax income. The basic state pension counts as a taxable income .The payment of tax depends on some factors like financial condition. If your income is low you may not be paying any tax and may get other benefits.

Recently on 29 November 2011 the Chancellor declared that the state pension age will increase between 2026-2028. Depending on increasing life expectancy the decision was made to manage the cost of state pension according to government.

Changes to pension age:
Under current legislation pension age to be increased to-

66 between November 2018 and October 2020
67 between 2034 and 2036
68 between 2044 and 2046

The above time table is not law yet. It requires the approval of Parliament.