Page last updated at 14:41 GMT, Thursday, 5 April 2007 15:41 UK

Finding out more about your pension

By Julian Knight
BBC News personal finance reporter

Finding out more about pensions can be straightforward

BBC News shows you how to go about finding out more about your pension.


The state pension is the bedrock of most people's retirement provision. On average, the over-75s derive nearly 60% of their total income from the state pension.

Single pensioner £87.30
Pensioner couple £139.60
Source: Department for Work and Pensions (DWP)

The government has said that it wants the state pension to remain at the heart of people's retirement provision.

But to be entitled to the full state pension you need to have made 44 years of National Insurance contributions if you're a man, and 39 years if you're a woman.

Periods of not being employed can mean that you fail to meet the criteria to get a full state pension.

However, people receiving unemployment or incapacity benefit will have their state pension credited as though they were working.

In addition, people spending time out of the workforce to look after children may be eligible for Home Responsibility Protection (HRP). HRP ensures national insurance contributions are credited.

You can obtain a forecast of your state pension from the Pensions Forecasting Service by calling 0845 300 0168.

Alternatively, you can write to: State Pension Forecasting Team Future Pension Centre The Pension Service Tyneview Park Whitley Road Newcastle upon Tyne NE98 1BA

If you find that you are behind in your national insurance contributions you can pay to make up the shortfall.


The S2P replaced the State Earning Related Pension (Serps) on 6 April 2002. As the name suggests the S2P is an additional pension system.

Under S2P, if you earn more than £75 a week and have not "contracted out" of the system you will be earning additional pension.

Calculating how much the S2P/Serps is worth is notoriously tricky as the final value depends on an individuals earnings over a long period of time.

According to the Pension Advisory Service (Opas) a S2P/Serps member who has earned enough to pay the top rate of Income tax since 1978 would be entitled to £69 a week extra pension if they retired tomorrow.

However, most people have to get by on considerably less, maybe just a few pounds a week as they have either not been paying S2P/Serps for a long time or have not enjoyed a high income.

A man and a child
Time spent looking after children need not harm pension prospects

Members of qualifying private pension schemes can "contract out" of S2P. If employees join a contracted-out occupational pension scheme, they and their employer pay lower National Insurance contributions.

If you contract out of S2P using a personal pension plan or a stakeholder pension plan, the government pays part of your National Insurance contributions into the plan once a year in the form of a rebate.

However, there has been growing concern that some consumers have been badly advised by financial advisers to contract out of S2P/Serps in the past.

The Pension Service website has more information on the S2P at its website:


Occupational and workplace pension schemes are duty bound to send their members an annual pension statement.

This should make clear in plain English the size of their likely pension in retirement.

In the case of final salary pension schemes, retirement income will depend on length of service and the final salary of the worker.

Under this type of scheme, the amount of pension earned should go up each year unless salary levels fall.

However, in recent years many final salary schemes have been replaced by money purchase pension arrangements.

Under money purchase, the size of the pension pot depends upon a combination of total contributions and investment performance.

As a result, the annual statements from money purchase pension schemes will give a likely future value based on different investment performance scenarios.

The same circumstances apply for stakeholder pensions - a type of low cost personal pension.

Ultimately, under money purchase arrangements it will be up to the scheme member at retirement to get the best possible annuity - a financial product which gives an income for life - with their pension pot.

Whatever type of scheme you are a member of, the trustees or your employer should have details of where you can get an up to date forecast from.

As for members of stakeholder or personal pension schemes they need to write to their provider.

If you would like to trace a pension scheme you have lost touch with the Pensions Scheme Registry can help on 0191 225 6316.


Financial advisers have received a very bad press following a succession of mis-selling scandals.

Advisers have been accused of putting the chance to earn fat commissions before their clients' best interests.

However, good financial advisers can help you plan effectively for your retirement.

Independent financial advisers (IFAs) work for themselves and most offer the choice of paying for advice through fees or allowing them to collect commission.

Pension Advisory Service (Opas) 0845 6012923
Financial Services Authority 0845 6061234
The Pensions Scheme Registry 0191 2256316
The Pensions Service 0845 6060265
Pensions Ombudsman 0207 8349144
Pension Forecasting Service 0845 3000168

Financial advisers are employed by a product provider, they are paid through a salary but some earn substantial commissions from the products they recommend.

There are sources of free guidance available.

The Financial Services Authority (FSA), the City watchdog, has a pensions guide for consumers on its website.

In addition, the watchdog, along with the Department for Work and Pensions, produces free booklets and fact sheets.

The FSA operates a telephone helpline: 0845 606 1234.

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