The State Pension

The state pension is one potential source of income in retirement. To qualify for a state pension you need to have made national insurance contributions, and the amount that you receive will depend on how many qualifying years of national insurance contributions you have made.

However, there is no right to a state pension - and there is no contract, so a future Government could decide to stop the pension or change the rules (although doing so would be unpopular and, therefore, is highly unlikely).

This makes planning difficult as assumptions have to be made about what sort of state pension there might be when you retire. We think it best practice to assume that the state package (however put together) will probably provide a pension set around the level at which significant social security benefits would kick in.

Our reasoning is as follows – generous pensions are expensive and probably not affordable by the Government, but nor do people like to think of pensioners living in poverty. This means that both very high, and very low, pensions will probably always be politically unacceptable, and will, therefore, not happen.