Many people approaching retirement may not be aware they need to have made National Insurance contributions for a specific number of years to receive the full New State Pension of £230.25 each week
The Department for Work and Pensions ( DWP ) has revealed that the State Pension currently delivers a regular income to 13 million elderly people nationwide, with over one million pensioners in Scotland amongst them. This benefit is accessible to individuals who have reached the UK Government’s qualifying retirement age, presently set at 66 for both men and women. They also have to have accumulated a minimum of 10 years of National Insurance (NI) contributions.
The retirement age is scheduled to increase to 67 from April. People nearing retirement may be unaware that securing the full New State Pension payment of £230.25 weekly requires approximately 35 years of NI contributions. This figure represents an average, as certain individuals who were ‘contracted out’ will require additional NI contributions to qualify for the complete sum.
While workplace and private pensions will supplement the State Pension during retirement, a significant number of people may depend on this contributory benefit as their sole retirement income. This makes it essential to understand the years of NI contributions needed to secure the maximum payment.
The State Pension age is also scheduled to rise from 67 to 68 during the mid-2040s. If you’re concerned about how many years you need to work – whether retirement is decades away or just around the corner – our useful guide below should help clarify how National Insurance contributions impact the State Pension you’ll receive, reports the Daily Record.
How to qualify for any New State Pension payment
To qualify for any State Pension, you’ll require a minimum of 10 qualifying years on your National Insurance record, though these needn’t be consecutive. This means that for at least 10 years, one or more of the following circumstances applied:
- you were employed and paid National Insurance contributions
- you were receiving National Insurance credits, for instance if you were out of work, unwell, a parent or a carer
- you were making voluntary National Insurance contributions
If you’ve resided or been employed overseas, you may still be eligible for some New State Pension. You could also qualify if you’ve paid married women’s or widow’s reduced rate contributions – further details are available on the GOV.UK website.
How to qualify for full New State Pension payments
It’s important to understand that ‘full’ refers to the maximum New State Pension amount an individual can obtain.
You’ll typically need approximately 35 qualifying years to secure the full New State Pension if you don’t hold a National Insurance record dating before 6 April 2016 – this figure may be higher if you were ‘contracted out’, more information here.
Individuals who have contributed between 10 and 35 years are entitled to a proportion of the new State Pension, though not the full amount unless they purchase additional NI years.
Qualifying years while in employment
When employed, you pay National Insurance and obtain a qualifying year if:
- you’re in employment and earning more than £242 per week from a single employer
- you’re self-employed and making NI contributions
You might not make National Insurance contributions if you’re earning below £242 weekly. However, you may still secure a qualifying year if you earn between £123 and £242 per week from one employer.
Qualifying years when not in employment
You may receive National Insurance credits if you’re unable to work – for instance due to illness or disability, or if you’re a carer or unemployed.
You can obtain National Insurance credits if you:
- claim Child Benefit for a child under 12 (or under 16 prior to 2010)
- receive Jobseeker’s Allowance or Employment and Support Allowance
- are in receipt of Carer’s Allowance
If you’re neither working nor receiving National Insurance credits
You may be able to make voluntary National Insurance contributions if you’re not in any of these categories but wish to boost your State Pension amount. Further information is available on the GOV.UK website.
Even with gaps in your National Insurance (NI) record, you can still be eligible for the full New State Pension. You can request a State Pension statement which will provide an estimate of how much State Pension you might receive.
To verify if there are any gaps in your record, you can apply for a National Insurance statement from HM Revenue and Customs (HMRC). If your National Insurance record has gaps that could hinder you from receiving the full New State Pension, you may have options to:
- Acquire National Insurance credits.
- Make voluntary National Insurance contributions.