The State Pension is a contributory benefit, so the amount you are paid in retirement will depend on how many years you have paid National Insurance
Workers need to make the right amount of National Insurance contributions to get the full State Pension (Image: Getty Images)
The Department for Work and Pensions (DWP) has released the latest statistics showing that the State Pension currently provides a regular financial income for 13 million older people across the country.
This payment is available for those who have reached the UK Government’s eligible retirement age, which is presently 66 for both men and women, and have paid at least 10 years’ worth of National Insurance (NI) contributions.
However, many individuals nearing retirement age may not realise that to receive the full New State Pension payment of £230.25 each week, they will need approximately 35 years’ worth of NI contributions. This is merely an average number of years as some people may have been ‘contracted out’ and will require more NI contributions to qualify for the full amount.
Workplace and private pensions will help supplement the State Pension in retirement, but many people may be depending on the contributory benefit as their sole income in retirement, so it’s vital to be aware of how many years you will need to make NI contributions in order to receive the maximum payout.
The State Pension age is set to rise to 67 between 2026 and 2028 with a further planned increase to 68 due to occur in the mid-2040’s.
If you’re concerned about the number of years you need to work, whether retirement is far off or just around the corner, the Daily Record’s helpful guide below should assist you in understanding how National Insurance contributions impact the amount of State Pension you’ll receive.
How to get any New State Pension payment
You will need at least 10 qualifying years on your National Insurance record to qualify for any State Pension, but they don’t have to be 10 qualifying years in a row.
This means for 10 years at least one or more of the following applied to you:
- you were working and paid National Insurance contributions
- you were getting National Insurance credits for example if you were unemployed, ill, a parent or a carer
- you were paying voluntary National Insurance contributions
If you have lived or worked abroad you might still be able to get some New State Pension.
You might also qualify if you have paid married women’s or widow’s reduced rate contributions – find out more about this on the GOV.UK website here.
How to get full New State Pension payments
The first thing to understand is the term ‘full’ means the maximum amount of New State Pension a person can receive.
You will need around 35 qualifying years to receive the full New State Pension if you do not have a National Insurance record before 6 April 2016 – this may be more if you were ‘contracted out’, find out more here.
For people who have contributed between 10 and 35 years, they are entitled to a portion of the new State Pension, but not the full amount unless they buy additional NI years.
Older people do not automatically receive full New State Pension payments of £230.25 each week when they retire (Image: Getty Images)
Qualifying years if you are working
When you are working you pay National Insurance and get a qualifying year if:
- you’re employed and earning over £242 a week from one employer
- you’re self-employed and paying NI contributions
You might not pay National Insurance contributions because you’re earning less than £242 a week. You may still get a qualifying year if you earn between £123 and £242 a week from one employer – find out more here.
Qualifying years if you are not working
You may get National Insurance credits if you cannot work – for example because of illness or disability, or if you’re a carer or you’re unemployed.
You can get National Insurance credits if you:
- claim Child Benefit for a child under 12 (or under 16 before 2010)
- get Jobseeker’s Allowance or Employment and Support Allowance
- receive Carer’s Allowance
If you are not working or getting National Insurance credits
You might be able to pay voluntary National Insurance contributions if you’re not in one of these groups but want to increase your State Pension amount. Find out more on the GOV.UK website here.
What if there are gaps in your National Insurance record?
You can have gaps in your NI record and still get the full New State Pension. You can get a State Pension statement which will tell you how much State Pension you may get. You can then apply for a National Insurance statement from HM Revenue and Customs (HMRC) to check if your record has gaps.
If you have gaps in your National Insurance record that would prevent you from getting the full New State Pension, you may be able to:
- get National InsuranceI credits
- make voluntary National Insurance contributions
Check your National Insurance record on GOV.UK here.
Check your State Pension age
Check your State Pension age to find out when you can retire and claim State pension using the free online tool at GOV.UK here.
This will tell you:
- when you will reach State Pension age
- your Pension Credit qualifying age
