We are living longer, staying healthier for many more years, but have we made the right pension provision for this increased longevity?

Pensions have not received a good Press in recent years and there have been too many pension fund scandals to list but apart from the seriously rich most of us are going to have to rely on a mix of state and private or company funding when we stop working.

The state pension scheme is a minefield and do not be complacent that the UK State Pension is an automatic right at 60 or 65, it is most certainly not.

At the moment the requirement is that you must have paid National Insurance contributions for 90 per cent of your working life, that’s a frightening 49 years for men and 44 years for women. Many will not have accrued sufficient credits so it is important to check with your local DSS office.

If you have not made sufficient contributions you can make them voluntarily, so if you only have a few years to go, check now, and spread the load.

Gradually, between this year and 2020 the state retirement age for a woman will rise to 65. This will slightly ease the current situation where this weeks SERPS (State Earnings Related Pension Scheme) contributions pay next week’s pensions for those already retired.

At the moment the flat State pension for a single person is just £90.70 per week, although in many cases this is topped up over and above the income support threshold by a number of other benefits. Again, ask your DSS office what you can expect firstly in basic pension, and then in extras to which you are entitled.

There are expected to be 12.5 million state pensioners in the UK by 2025 and the system is under a great strain already. The problem is that due to improved social and medical facilities people are living much longer, population growth is slowing and there are fewer young people coming into the jobs market.

There is reform and change ahead. For men born from April 6^th 1945 and women born from April 6^th 1950 the link between state pension and earnings is to be reintroduced and the minimum number of qualifying years will be reduced. The Pension Credit Scheme is also to be modified to favour people without any other income.

There is no guarantee of this reversal to the old system, which is due to happen by 2012, because it depends on affordability.

An important immediate change, from April this year, is that the required minimum number of years NI contributions is to be reduced to 30, but, you will have to continue to pay NI until you reach state pension age. Got it?

Alongside this will go the Pension Credit system. A guaranteed credit will be paid to those with less than £6,000 savings and depend on the state pension.

This is only a brief overview of what you can expect from the state. Private and company pensions are myriad and equally complex involving tax free lump sum options, purchase of additional annuities and a host of other factors.

We will be taking a look at as many of them as possible in the coming months to try and help you understand where your Third Age is taking you financially.

As always, if in doubt, we recommend that you seek the services of an Independent Financial Advisor. If an advisor recommends a product, always ask if they are paid on a commission basis. Usually it is better if an advisor works on a fixed fee basis so that maximum benefits of any accepted plan come to you.

Graham Smith for Third Age.