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Graduated Pension

Graduated Pension
Published:  25 Feb at 9 AM
In April 1961 the government introduced the State Graduated Pension, also known as the Graduated Benefit or Graduate Retirement Benefit. This was a state scheme related to your National Insurance contributions which were in turn related to your earnings as an employee. Your National Insurance contributions were divided into ‘units’: essentially every £7.50 that a man contributed and every £9 that a woman contributed bought one unit. These units would be given a value and used to calculate entitlement to an extra benefit on retirement. The scheme was intended to top up the basic State Pension and ensure that pensioners had more to live on than this basic benefit alone. This early form of the earnings-related pension was later replaced by SERPS in April 1975 which has in turn been replaced by State Second Pension, or S2P.

Those who paid Graduated National Insurance contributions will be entitled to receive a Graduated Pension. The chances are that when you come to retire you will have paid into a combination of earnings-related schemes, including the Graduated Pension scheme, SERPS and S2P. You should receive your basic State Pension and any additional benefits built up when you retire.

Many employees paid into their employer’s additional pension schemes rather than the Graduated Pension scheme. Often these schemes were seen to be viable alternatives to the state scheme, offering their employees equal or improved benefits on retirement. If you made no contributions to the Graduated Pension scheme then you will not receive a Graduated Pension.

You will have to claim your State Graduated Pension at the same time as you claim your basic State Pension. The forms should be sent out to you automatically, shortly before you reach State Pension age. If you have not received a claim form and you reach State Pension age in less than three months, contact the Department for Work and Pensions for assistance. Your State Graduated Pension will be paid with your basic State Pension, via direct debit into a bank account you nominate.

If your spouse dies, you may be entitled to a percentage of their State Graduated Pension. Currently a wife can receive half her late husband’s Graduated Pension when she retires, but a husband is entitled to his late wife’s Graduated Pension only if they were both of State Pension age or older when his wife passed away.

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