State Benefit explained

How much is the State Pension worth?

In the 2009/10 tax year, basic state pension benefits are:

• £95.25 a week for a single person
• £152.30 a week for a married couple

If a couple both qualify for a full basic state pension, this brings the total up to £190.50 a week. To qualify for this level of basic state pension, you must have paid National Insurance Contributions for a minimum number of years.

Additional State Pension

You may also receive an additional state pension – either from the State Earnings-Related Pension Scheme (SERPS), or the State Second Pension. The amount of this pension depends on how much your earnings were.

You can get a forecast of your state pension benefits at The Pension Service website.

How much will you need?

As a broad rule of thumb, most people agree that a retirement income of around two thirds of your final salary is sufficient. Chances are that your children will have left home, your travel costs will be lower and your mortgage repaid.

If you earn £750 a week, you should be saving enough to provide you with a total pension of around £500 a week. Of course you can deduct your state pension benefits from this figure to give you your target pension plan income.

In reality, the amount you actually need depends to a great degree on how you plan to spend your retirement. If you want to travel, you could need more. And don’t forget about inflation and salary increases, they can make a big difference to your target pension.