State pension payments could rise thanks to higher National Insurance contributions | Personal finance | Finance


How much an elderly person receives from their state pension depends on their national insurance record. In order to obtain the new full state pension, taxpayers must have 35 years of national insurance contributions under their belt and 30 years for the old state pension. However, some people have gaps in their National Insurance record which could cause them to miss out on a full pension package.

To get one of the new full state pensions, Britons need at least 10 years of National Insurance contributions.

Retirees may receive less than the new full state pension if they were contracted before April 6, 2016.

People can also receive more than the new full state pension if they have received more than a certain amount of additional state pension under the old rules.

Currently the new full state pension is £185.15 per week, while those on the old state pension receive a weekly amount of £141.85 per week.

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The reason some people have gaps in their National Insurance record is because they are out of the labor market for a period of time.

Anyone can get a state pension forecast that will tell you how much they will be paid once they reach retirement age.

After that, they can apply for a National Insurance Statement from HM Revenue and Customs (HMRC) to check if there are any gaps in their record.

If someone has gaps in their record, they can see if they are eligible for National Insurance credits, which can automatically increase someone’s potential state pension.


Vulnerable groups are able to do this, for example those on certain benefits automatically get class 1 credits while unpaid carers might be eligible for carer credit.

Alternatively, those nearing retirement could make voluntary contributions to their record to help boost their state pension.

Despite the many ways to help your retirement, Richard Eagling of NerdWallet, warned that it’s a “dangerous game” to rely solely on the state pension.

Mr Eagling said: “Sometimes you hear people who haven’t made any plans for their retirement, saying they’re not worried because they’ll only be living off their state pension.

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“It can often be based on a lack of awareness of how little the state pension actually pays.

“The amount you receive will depend on your National Insurance record. Moreover, who knows what the state pension will be when you retire and at what age you will be able to get it?

“It’s a dangerous game to rely solely on the state pension without saving anything yourself.”

The retirement expert encouraged people to research how they can increase their retirement pots and outlined what people ideally need to live comfortably.

He added: “Ask yourself what a good retirement looks like for you. Do you want to retire early and stop working at 55 or 60?

“Perhaps you like to work and will only semi-retire, work part-time, start your own business, or do volunteer work instead of quitting work altogether.

“Whatever you imagine your retirement will look like, figure out what you need to do now to make it achievable.

“There are many free online pension calculators that can help you. Pop a few numbers into a pension calculator to see how much you’re on track to get based on your current pension contributions and pension values.

“Keep in mind that the Pensions and Lifetime Savings Association estimate that the average person needs an annual retirement income of £20,000 for a moderate lifestyle and £33,000 for a comfortable retirement, although your own needs may differ.”


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