The government uses part of the payments collected through National Insurance (NI) to provide state pensions for individuals who have reached state pension age. For the 2008/09 tax year, the basic state pension provides £90.70 each week for a single person, or £145.05 for a couple, as long as they have made sufficient NI contributions throughout their working lifetime.

You may have heard of Pension Credit, introduced in October 2003. It is a means-tested benefit for people over 60 and it’s worked out based on the level of income and savings that you have at that time. For the 2008/2009 tax year, it guarantees everyone aged 60 and over an income of at least £124.05 a week if you’re single or £189.35 a week for a couple.

If you have modest savings you may still qualify for Pension Credit, which means more money for you. However, even if you get Pension Credit, most people need to make extra arrangements.