State pension warning as National Insurance contributions ‘don’t always’ raise payments | Personal Finance | Finance


How much someone gets from their pension is dependent on their National Insurance record with someone needing 35 years under their belt to get the full new state pension. For the full basic state pension you need a total of 30 qualifying years of National Insurance contributions or credits. If someone is missing years of contributions, they are likely to miss out on the full state pension payment.

One of the ways people approaching retirement boost their state pension is by purchasing National Insurance contributions.

However, Britons are being warned that purchasing National Insurance contributions does not always end this way.

On its website, MoneyHelper reminded the public that this state pension boost may not materialise in claimants getting higher payments.

The advice centre explained: “Voluntary contributions don’t always increase your state pension.

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“Be aware that you need 35 qualifying years to receive the full [new] state pension so a gap doesn’t necessarily mean you won’t get the full state pension amount.

“It’s 30 years for people who reached the state pension age before April 6, 2016 under the old [basic] system.

“The DWP isn’t authorised to give financial advice so they can’t tell you whether you should pay voluntary National Insurance contributions.”

For anyone to get anything from the new state pension, they need at least 10 qualifying years of National Insurance contributions.

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Older people may get less than the new full state pension if they were contracted out before April 6, 2016.

Pensioners may also get more than the full new state pension if they have had over a certain amount of the additional state pension under old rules.

As it stands, the full new state pension is £185.15 per week while people on the old state pension get a weekly amount of £141.85 per week.

The primary reason individuals have gaps in their National Insurance record is due to being out of the workforce for a period of time.

It is possible to ask for a state pension forecast which will outline how much someone will get paid once they hit the state pension age, which is currently 66.

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How to apply for National Insurance credits

People can apply for a National Insurance statement from HM Revenue and Customs (HMRC) to check if their record has gaps.

If it turns out they have gaps in their record, they can check their eligibility for National Insurance credits which can automatically boost someone’s eventual state pension amount.

Various groups who have been out of the workforce and are considered economically vulnerable can apply for specific credits.

For example, those on certain benefit payments get Class 1 credits automatically while unpaid carers could be eligible for Carer’s Credit.

Richard Eagling from Nerdwallet shared why it is important people review their National Insurance record to see whether voluntary contributions are right for them.

Mr Eagling said: “Whatever you imagine your retirement will look like, determine what you need to do now to make it achievable.

“There are lots of free online pension calculators that can help you. Plug some figures into a pensions calculator to see how much you’re on track to get based on your current pension contribution and pension values.

“Keep in mind that the Pensions and Lifetime Savings Association estimates 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 requirements may differ.”



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