State Pension
The state pension is a basic package that the government pays to those who reach the state pension retirement age. You must however, be eligible. The ‘eligibility’ for a state pension is based upon the number of qualifying years that a person has. These years are gathered through the National Insurance Contributions that a person has paid in their working life.
Currently the basic state pension is £97.65 a week which isn’t much especially when groceries and everyday essentials are creeping up in price. The purpose of the state pension is to keep people above the poverty line and allow them money that will help them buy food and pay for transport. However, with the rise of utility bills this amount has begun to be insufficient for many. For people that want to have more money than what the basic state pension can provide per week, setting up a stakeholder pension would be a good idea and could make day to day living a little less stressful.
Other state benefits include; pension credit and housing benefit which may be used as a supplement to the basic state pension but not everyone is entitled to this. Again, it is all down to individual circumstances so check with local authorities as to what you are entitled to before assuming you will be getting a set amount of money only to be disappointed.
There is also an additional state pension which is used as a top up of the standard state pension. It is also known as SERPS. It was introduced in the 1970′s to give extra income to people who were struggling and was originally based on National Insurance contributions, meaning the more that a person earned the higher the pension would be. However SERPS was replaced in 2002 by the state 2nd pension which was designed to give a fairer deal to those really in need. SERPS did not benefit people unable to work so there was a social divide created. Now, people on low to medium incomes, carers and people with disabilities can now build up an additional state pension through credits.