The qualifying rules for the state pension are changing this year
Martin Lewis has explained the rules around the state pension(Image: ITV)
Martin Lewis has provided some clarity on the eligibility rules for the state pension. The financial journalist delved into the specifics of how the DWP payments work after a query during a call-in to his BBC podcast. The listener contacted the show as he was planning for his retirement.
The person revealed that they intended to stop working soon, but had not yet reached the age at which they could claim their state pension. They had consolidated all their personal pensions and were now considering how their state pension payments would contribute towards their retirement finances.
Currently, you can begin claiming your state pension when you reach the age of 66. The access age will soon be increasing, moving up gradually from April 2026. The state pension age will reach 67 by April 2028. At present, the full new state pension pays £230.25 weekly, or £11,973 annually.
Payments are set to increase by 4.8 percent next April, thanks to the triple lock policy. This will raise the full new state pension to £241.30 per week, or £12,547.60 a year.
The caller said they had used the HMRC app to check their status and it seemed to indicate that they were on course to receive the full new state pension. Your entitlement is accrued through paying National Insurance (NI) contributions.
A general rule to note
The person asked Mr Lewis, given their plans to stop working and thus stop making National Insurance contributions, whether this could impact their state pension entitlement. They also wanted to know whether continuing to make contributions would be necessary to secure their full entitlement.
In reply, Mr Lewis explained: “You generally need 35 years-ish, and it is a huge capital letter ‘ISH’, to get the full state pension. 35 years-ish of National Insurance contributions and then you get the full state pension when you hit retirement age.” Typically, 35 years of complete NI contributions are required to qualify for the full new state pension.
This differs from the previous basic state pension system. Under this older scheme, you typically need 30 years of contributions to receive the maximum amount. It’s important to understand that you must actively apply for your state pension before payments start landing in your bank account.
Payments don’t begin automatically when you reach state pension age. Some people opt to postpone claiming their state pension past their qualifying age. This may mean you can get higher payments when you eventually apply for the benefit.
Mr Lewis continued with his response: “But there are so many different factors here. What you do is you rely on the forecasts that you can get on gov.uk that will show you both any missing National Insurance years and it will also show you what you are projected to get.”
You can get your state pension forecast via a dedicated tool available on the Government’s website. The financial expert explained that the forecast should provide two figures: your state pension entitlement based on the National Insurance you’ve contributed thus far, and a projection of what your entitlement will be should you continue making NI payments.
The caller verified that their forecast had shown they were set to receive the maximum amount, given their existing contributions. Despite these encouraging predictions, Mr Lewis cautioned that the system is “complicated”. He said he couldn’t offer any “cast-iron guarantees” regarding the precise sum the listener would ultimately get.
A date for your diary
However, he did point to an “easy” principle worth remembering. Mr Lewis explained: “If you stop work now, you can always buy back up to six years of past National Insurance contributions.
“So stop work, carry on with your life, and then make sure you put a note in your diary, sending yourself a delayed email, however you tend to it, for about five years’ time, to go and check this process and see where you are again. If at that point, something has changed, so it looks like you’re no longer on for the full state pension, then I would buy back one of these missing years.”
Should you wish to set yourself a reminder to review this matter in five years, you’d be looking at marking your calendar for approximately January 2031. Mr Lewis added a cautionary note for the caller: “What I certainly wouldn’t do with what you’ve told me is be buying years just now in case you don’t need to.”