Looking at State Pension Options


One of the many areas where McCrea Financial Services offer specialist advice is pensions and retirement planning and here we are looking at the importance of the State Pension and with many changes over recent years many people are in the dark over what State Pension they will receive at retirement age.

The full amount of State Pension is currently £159.55 a week for those retiring after 5 April 2017, and it is generally an improvement over the old basic state pension.

You must have made 35 qualifying years of national insurance contributions, but there is a big catch.  If you have been in ‘contracted out’ employment, you will have been paying a reduced rate of contribution and this will result in a deduction from the full pension.  For anyone who keeps working until state retirement age, any further qualifying years beyond the required 35 will help rectify the situation.

However, there is also an attractive option for those retiring early, especially public sector employees retiring at 60.  The idea is that you can pay voluntary class 3 contributions for each of the five or six years between retirement and reaching state pension age (65 or 66), reducing the amount of deduction. The current cost for each year of voluntary contributions may seem high at £741, but this could add £237 a year to your pension – not a bad return if you live well into your eighties or nineties.


You might decide to keep working on a self-employed basis after retiring and currently you can then obtain further qualifying years by paying class 2 contributions of just £148 a year.  Class 2 contributions will be abolished from April 2018, with pension entitlement then coming from class 4 contributions.

Advice is essential, but in general terms, a top-up is worthwhile if you are in good health, do not pay tax at higher rates and you are married as your partner may be able to inherit part of your state pension on death.

You can find more information about the pension advice we offer here as well as retirement options.  We also offer a comprehensive Portfolio and Regular review service of your existing financial position so that you can best consider what steps to take next.   Contact us by email or call 0141 572 1340 if you'd like to book a no-obligation initial meeting.