Go back to work
To receive a full state pension, you’ll usually need 35 years of National Insurance contributions. However, even if you hit that target, you could still end up with less.
Before 2016, some people were “contracted out” of the additional state pension. This allowed them and their employer to pay less National Insurance but their eventual state pension would be reduced. To compensate, the employer had to pay them more private pension in retirement, so it at least matched the amount the worker missed out on.
When their state pension amount is calculated, a “contracting out deduction” is applied, leaving many people with less than the full amount. However, any years worked after 2016 until reaching the state pension age “burn off”, or replace, those affected years and boost their payout by £6.89 a week.
Consequently, if someone reached state pension age this year but they’d been extensively contracted out before 2016, they’d receive a maximum of £184.90 a week. However, if they had worked for around nine years after 2016, it would be boosted to the full amount of £241.30.
For some people with fewer than nine years of contributions after 2016, returning to work could be worthwhile.
Make voluntary contributions
You could also achieve the same thing by making voluntary top-ups. For £956.80, you can buy a year of National Insurance contributions to provide a boost to your state pension.
Sir Steve Webb, partner at pension consultants LCP and a former pensions minister, says: “Most people with nine years or more of post-2016 contributions will have reached a full new pension if they already had 30 years in the system before the rules changed in 2016.
“But if their state pension forecast is short of the full rate, an extra year or two of work or of voluntary National Insurance contributions could be enough to make the difference between a full pension and a slightly reduced one.”