Example of how State Second Pension can help a low earner

Robin works part time in a small supermarket warehouse. He earns £7,500 a year. This doesn’t leave him enough spare cash to save for a private pension. Under the State Second Pension rules, we will treat Robin as though he had earnings of £11,600 in 2004/05, and his additional State Pension will build up at a faster rate. As a result, Robin will build up an additional pension which is more than twice as much as he would have got from SERPS.

Example of how State Second Pension can help a carer

Neela is 31 and has been in full-time work since the age of 18. Her daughter Mina was born on 1 December 2000 and Neela decides to stay at home to look after her. She does not plan to return to work until September 2007. As long as Neela is the person who has claimed and been awarded Child Benefit, she will qualify for Home Responsibilities Protection to protect her basic State Pension and will also build up additional State Pension through State Second Pension for each full tax year since 6 April 2002 (when State Second Pension began) that she is at home looking after Mina until Mina’s sixth birthday. This means Neela will qualify for State Second Pension for the four years from 6 April 2002 until 5 April 2006. This will be worth about £4.50 a week extra on her State Pension.

Example of how someone who is ill or disabled can be helped by the State Second Pension

Derek has worked for 37 years, but becomes ill in September 1999. He is too ill to return to work, so he gets long-term Incapacity Benefit until he reaches State Pension age in May 2010. Derek qualifies for a State Second Pension based on each full tax year for which he gets long-term Incapacity Benefit between 6 April 2002 (when State Second Pension began) and his State Pension age. This is because, at his State Pension age, Derek has paid Class 1 National Insurance contributions for more than one-tenth of his working life since 1978 and so he passes the Labour Market Attachment Test. Derek’s State Second Pension will be worth about £9 a week on his State Pension in 2004/05 terms.

You may want to get further information about pensions from Citizens Advice, your employer or your union (if you belong to one).

If you are not sure what to do for the best, you can get advice from a financial adviser. But remember, if you see an adviser you may have to pay for their advice.