When you retire you may receive a pension from the State, depending on the National Insurance contributions you have paid. There are two parts to the State Pension:
- Basic State Pension – a flat-rate pension, paid if you have paid enough National Insurance contributions
- State Second Pension – a top-up to the Basic State Pension
Pace DC is ‘contracted in’ to the State Second Pension, which means that you would build up benefits in the State Second Pension as well as in Pace DC. This means that you pay full rate national insurance contributions while in Pace DC, because you’ll also build up valuable State pension while you’re a member.
Please note that Pace Complete was ‘contracted out’ of the State Second Pension, which means that if you were a member of Pace Complete before it closed in 2015, you wouldn’t have built up benefits in the State Second Pension during your period of active membership of Pace Complete.
For more details of State benefits, including how to obtain a forecast of your State Pension, go to www.gov.uk/workplacepensions
State Pensions are changing
A new State Pension will be introduced for anyone who reaches State Pension Age from April 2016. It will replace the Basic State Pension and the Second State Pension (S2P). There will be transitional arrangements in place for people who have built up S2P, but the aim is that eventually everyone who has paid enough national insurance contributions will get the same amount. Please note, under the new system, you will need 35 qualifying years to receive the full amount of State Pension and you must have a minimum of 10 qualifying years to receive anything. You can find out more at www.gov.uk