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Pensions and retirement


Most people will need a pension to support their retirement beyond their working years, or to support a partner or other family members.

Jump to:

  1. State pensions
  2. Personal pensions

Many people try to start building their pension from a relatively young age because we tend to live longer than previous generations.

The state pension is designed to cover the most basic of needs and many older people who have no independent savings live in poverty.

As with welfare benefits, the state pension rules are also subject to change and you may not be able to rely on this to cover all of your needs when you retire.

State Pension

Throughout your working life, your national insurance contributions will build up your entitlement to the State Pension.

National Insurance contributions are also credited to your National Insurance record when you are unable to work and are, for example, claiming Employment Support Allowance, Jobseekers Allowance or Carer's Allowance.

This pension is separate to any workplace or personal pension that you may save for.

The State Pension age

The State Pension is a regular payment from the Government that most people can claim when they reach State Pension age.

The age at which people qualify for a State Pension is changing and you will be affected if you are a man born on or after 6 April 1951, or a woman born on or after 6 April 1953.

If you reach State Pension age before 6 April 2016, you will need 30 years of National Insurance contributions to qualify for the full State Pension, otherwise you will receive less than the full pension.

If you reach State Pension Age after 6 April 2016, then you will need 35 qualifying years of contributions in order to receive the full State Pension.

You can calculate your State Pension age on the gov.uk website. These changes are not yet law in Northern Ireland.

Changes to State Pensions:

With few exceptions, from April 2016 you will no longer be able to claim a pension based on the contributions of your husband, wife or civil partner.

'Contracting out' to pay a lower rate of NI contributions because you are paying into another type of pension, such as a final salary scheme, will no longer be an option and this will come to an end.

You can continue to work while claiming your State Pension, but this may affect your entitlement to other benefits. Please contact THT Direct or online advice for further advice on this.

Personal pensions

A personal pension is a way of saving for your retirement. This option might suit you if:

  • you are working but are not eligible for automatic enrolment into your employer's pension scheme
  • you are self employed, or
  • you are not working.

Here's how it works:

  1. you make regular payments into your pension fund
  2. you may receive tax relief on these regular payments
  3. your employer might also make payments into your pension fund
  4. the fund is invested, for example in stocks and shares, for when you retire.

Stakeholder Pensions

Stakeholder Pensions are like personal pensions but they must meet the following conditions:

  • the pension provider can't charge more than 1.5% of the fund's value for the first 10 years, and 1% thereafter, for administering the pension
  • the minimum contribution is set at £20 per month, although you can pay in more than this
  • you make payments into your fund whenever you want and payments do not have to be regular
  • there are no penalties for missing or stopping payments
  • you can switch your fund to another stakeholder scheme or other pension at any time without any penalty.

If you need greater flexibility in when and how much you pay into your pension, a stakeholder pension may be a good choice for you.

Self-invested personal pensions (SIPPs)

With standard personal pension and Stakeholder Pension schemes your investments are managed for you within the fund you have chosen.

SIPPS are for experienced investors or those with lots of money to invest, as they tend to have higher administration charges.

SIPPs are a form of personal pension scheme that give you the freedom to choose and manage your own investments. SIPP providers include insurance companies, pensions consultants and fund managers.

The Association of Member-directed Pension Schemes (AMPS) is the trade body for SIPPs providers and managers. You can find a list of approved SIPP managers by visiting their website.

Workplace Pension Scheme

Workplace pensions involve saving up for your retirement through contributions deducted directly from your salary. Your employer may also contribute to your pension through this scheme if they offer automatic enrolment into the scheme.

There are two types of workplace pension schemes:

  1. occupational pensions
  2. group personal pensions or Stakeholder Pensions.

Occupational Pensions

These are divided into two types:

  1. final salary schemes
  2. money purchase schemes.

1. Final salary schemes

In a final salary pension scheme your pension is linked to your salary while you're working, so it automatically increases as your pay rises. Your pension is based on your pay at retirement and the number of years you have been in the scheme. It is not dependent on the performance of the stock market or other investments.

In most final salary schemes, you pay a set percentage of your wages towards your pension fund and your employer pays the rest. However, final salary schemes are becoming less common and most employers no longer offer them.

2. Money purchase schemes

With money purchase schemes, the money you pay into the scheme is invested with the aim of giving you an amount of money when you retire. Your pension will be based on the amount of money paid in and on how the investments have performed.

You'll usually pay a percentage of your wages into the scheme and your employer may also pay a regular amount in - but this isn't always the case. However, if your employer offers automatic enrolment into a workplace pension they will be obliged to make contributions.

Other benefits of occupational pension schemes:

As well as a pension when you retire, occupational pension schemes often offer:

  • life insurance which pays a lump sum or pension to your dependants if you die while still employed
  • a pension if you have to retire early because of ill-health
  • pensions for your wife, husband, civil partner and other dependants when you die.

Group personal pensions and Stakeholder Pensions through your workplace Workplace (or group) personal pensions and Stakeholder Pensions work in a similar way to the ones you can arrange for yourself.

Your employer chooses the pension provider but you will have an individual contract with the pension provider. This may be an option if you are not eligible to automatically enrol into your workplace pension.

You pay contributions into your pension fund direct from your wages. The money is invested to grow your fund, which you use to provide you with a pension when you retire.

The main difference between arranging a personal or stakeholder pension yourself and joining one through your workplace is the amount of control you have over how the money you pay into your fund is invested. With a workplace scheme, the investment choices may be made for you by the provider.

Between October 2012 and April 2017, employers must enrol their staff into their workplace pension if they are eligible employees.

You will be eligible for workplace pension enrolment if you are:

  • not already in a workplace pension
  • aged 22 or over
  • under State Pension age
  • earning more than £10,000 a year
  • working in the UK.

If you don't want to enrol into the pension scheme, you can choose to opt out. However, if you can afford to join the scheme, it is a good idea to do so. This is because your employer has to make a contribution into the scheme as well as you making your own contributions.

Also, you will get tax relief on the contributions you make into the scheme.

Help with pensions:

If you're a person living with HIV in the UK, you can register on myHIV to use our Online Advice service.

You can also get independent advice on pensions from the following:

Over 50 and living with HIV?

The Health Wealth and Happiness Project supports the financial, emotional and physical wellbeing of over 50s living with HIV in Brighton, Bristol, London, Manchester and the West Midlands.



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The Information Standard: Certified member

This article was last reviewed on 29/10/2015 by Anna Peters

Date due for the next review: 29/10/2018

Content Author: Gillian Arrindell

Current Owner: Advice & Advocacy

More information:

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