The qualifying rules for the state pension are changing
Martin Lewis has shared some tips around the state pension(Image: ITV)
Consumer expert Martin Lewis has offered some guidance on how your state pension entitlement works. He set out how the rules work after a question was submitted to his BBC podcast about National Insurance contributions.
You typically need 35 years of National Insurance (NI) contributions to receive the full new state pension, which currently pays £241.30 a week, or £12,547.60 a year. Payment rates rose by 4.8 percent in April in line with the triple lock.
The triple lock pledge guarantees the state pension increases each year in line with whichever is highest out of 2.5 percent, the rate of inflation or the rise in average earnings. A listener to his BBC podcast posed a question as she was trying to decide whether to plug some of the gaps in her NI record.
You can voluntarily purchase contributions if you have any gaps in your record over the past six tax years. The listener said she had two years of missing contributions, as she had spent some time studying and living abroad. She revealed she is currently 36 and that paying for the two years of missing contributions would bring her total up to 10 years.
She asked Mr Lewis whether it would be worth paying for the two years now, given she will most likely reach the 35 years required for the full new state pension eventually over the rest of her working life. Under current rules, her state pension age will be 68, so if she continues paying National Insurance right up to that point, she would accumulate a further 32 years of contributions, giving her a total of 42 years if she also paid for the two missing years.
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This would in likely be sufficient to qualify for the full new state pension under the existing system. Mr Lewis responded by outlining the key rules to bear in mind.
10-year rule
He noted that the first thing to be aware of is the “minimum number” of National Insurance years you need is 10 years, to receive any state pension when you eventually put in your claim. He said: “That is the minimum. If you have less than 10 years, nothing counts.”
Mr Lewis went on to explain why topping up your National Insurance contributions can be a very shrewd move if it increases your state pension entitlement. He said: “An extra National Insurance years is worth around £360 a year of state pension for you.
“So if you’re going to retire on less than the full state pension and you can buy a year, even if it costs you £1,000, because it’s going to add £360 a year to your state pension, even if you live just a few years once you get your state pension, you make your money back.”
Purchasing one full National Insurance year typically adds £6.89 per week to your state pension entitlement, or roughly £358 annually. The rate you pay to buy NI years depends on which tax year the contributions relate to.
For the past two tax years, you pay the original rate for that year, while for any earlier years, you pay the rate for the current year.
These are the current rates you would have to pay:
2026/2027 tax year – £956.80 (£18.40 a week)2025/2026 tax year – £923 (£17.75 a week)2024/2025 tax year – £907.40 (£17.45 a week)2023/2024 tax year – £956.80 (£18.40 a week)2022/2023 tax year – £956.80 (£18.40 a week)2021/2022 tax year – £956.80 (£18.40 a week)2020/2021 tax year – £956.80 (£18.40 a week).’Completely unbeatable’
Mr Lewis also reminded listeners that given the triple lock increases payments each year, it’s “completely unbeatable” in terms of the value you can potentially get out of it. However, he warned younger people that “the current system could change” by the time they reach retirement age.
Addressing the woman’s specific situation regarding her two missing years, Mr Lewis advised her to first check her state pension projection, which you can view on the Government website. He suggested finding out whether she is on course to receive the full state pension upon retirement.
Delivering his verdict, Mr Lewis said: “If you are, I think this is probably overkill, because it’s not like once you get to the full state pension, you earn more National Insurance years, you get an even bigger state pension. It doesn’t work like that.
“Many older people complain saying, I’ve now got enough for my full state pension, why do I have to keep paying National Insurance? That’s because National Insurance is a tax in reality, it’s just a tax that happens to be demarked as your contributions towards getting your state pension when you are older.”
Although he cautioned against her purchasing the two years, Mr Lewis did highlight one exception to this. He said it may be worth getting your wallet out “if you can buy these years really, really cheaply”. He explained: “If any of these are part years, where you’ve almost got all the contributions you need to get a year but you’re not quite there. It is binary.
“I know people who have been able to buy part years for £15. Normally a full year is going to cost you around £900, but if you could buy a part year for £15, £20 or maybe even £50. Even at your age, just in case something happens in future as you can only buy back a certain amount, you can only buy back six years, I would be tempted just to do it just on the off chance I might need it in the future.”
Means testing the state pension
In contrast, Mr Lewis said that given her age and the possibility the state pension system may undergo changes, if she would need to pay for a full year, it might not prove worthwhile, given the system could be changed. He explained: “You are so young at 36 for doing this.
“There are a lot of risks that you are just going to buying money, throwing it away. There are big risks for you that the state pension might become means tested once you’re older.
“We don’t know that. I don’t think that’s going to happen imminently, I don’t think it’s going to happen for people who are retiring now, but you’re talking about retiring in 30 to 35 years, and who knows what will be happening to state pensioners in the UK in 30 to 35 years. So there are a lot of risks in doing it now.”
Changes to how you access the state pension are already under way. The state pension age is increasing gradually from 66 to 67 between April 2026 and April 2028. Legislation is also in place for it to increase from 67 to 68 between April 2044 and 2046.
Another thing that could change is the triple lock. as this may be replaced with a less generous annual increase measure. Labour has pledged to maintain the policy for the duration of this Parliament, meaning it will remain in place for the next few years.