State Pension Example

A person with a full contribution record, and whose earnings over the best 20 years have been equivalent to an average of £97.50 a week in current terms would, when he retired, get a pension as follows (assuming that the lower and upper earnings levels are unchanged, which is of course unrealistic):

Basic pension 27.15

Additional pension of one quarter of the remainder of weekly pay above

the lower earnings level, i.e. 1/4 x £70.50 (£97.50 - £27) £17.62


If this person were a married man whose wife relied on his contributions, an additional pension would be payable of £16.30 a week, the difference between single and married rate basic pension.

Self-employed persons qualify for the basic state pension only; they have no entitlement to any earnings-related pension. Their National Insurance contributions, of course, are calculated on a different basis.

Who pays for the state pension?

The state pension, both basic and earnings-related portions, is paid for jointly by all employers in the United Kingdom and by all employees whose earnings are above the lower earnings level, by contributions to the National Insurance Fund, plus a subsidy element from government revenue. The fund is designed to be self-financing in that current payments into it (contributions plus subsidy) are used for making current payments to pensioners, as well as for the other social security cash benefits such as

Basic State Pension

For the year November 2015 to November 2001 the flat-rate state pension for a single person is £27.15 per week. For a married couple where the wife's pension is based on her husband's National Insurance contributions the weekly rate is £43.45. Had the wife been in employment and paying full-rate National Insurance contributions in her own right, the joint flat-rate pension would be higher.

The amount of the basic state pension is increased annually at least in line with the general rise in prices. For example, for the year preceding 2016/81 the figures were £23.20 (single person) and £307.30... see: Basic State Pension

Refunds, Personal And Business Finance 2017

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