The Department for Work and Pensions (DWP) has released the latest figures showing that the State Pension currently provides a steady financial income for 13 million elderly people across the nation.
This benefit is available to those who have reached the UK Government’s eligible retirement age, which presently stands at 66 for both men and women, and have made 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 figure is merely an average as some people may have been ‘contracted out’ and will require more NI contributions to qualify for the full amount – further information about this can be found on GOV.UK. For money-saving tips, sign up to our Money newsletter here.
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Workplace and private pensions will 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 understand how many years you will need to make NI contributions to receive the maximum payout.
The State Pension age is scheduled to rise to 67 between 2026 and 2028, with a further planned increase to 68 set to occur in the mid-2040s, reports the Daily Record.
If you’re concerned about the number of years you need to work – whether retirement is a distant prospect or just around the corner – our helpful guide below should clarify how National Insurance contributions influence the amount of State Pension you’ll receive.
How to qualify for any New State Pension payment
You’ll need at least 10 qualifying years on your National Insurance record to be eligible for any State Pension, but these don’t have to be 10 consecutive years.
This means that for at least 10 years, one or more of the following applied to you:
you were employed and made National Insurance contributions
you received National Insurance credits, for instance if you were jobless, ill, a parent or a carer
you made voluntary National Insurance contributions
Even if you’ve lived or worked overseas, you might still be able to receive some New State Pension.
You may also qualify if you’ve made married women’s or widow’s reduced rate contributions – learn more about this on the GOV.UK website here.
How to receive full New State Pension payments
The first thing to understand is that ‘full’ refers to the maximum amount of New State Pension a person can get.
You’ll need approximately 35 qualifying years to receive the full New State Pension if you don’t have a National Insurance record before 6 April 2016 – this could be more if you were ‘contracted out’, find out more here.
For individuals 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 purchase additional NI years.
Qualifying years if you’re working
When you’re employed, you pay National Insurance and earn 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 be paying National Insurance contributions because your earnings are less than £242 a week. However, you may still earn a qualifying year if you earn between £123 and £242 a week from one employer – find out more here.
Qualifying years if you’re not working
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 receive National Insurance credits if you:
claim Child Benefit for a child under 12 (or under 16 before 2010)
receive Jobseeker’s Allowance or Employment and Support Allowance
are in receipt of Carer’s Allowance
If you’re not working or receiving National Insurance credits
You might be able to make voluntary National Insurance contributions if you’re not in one of these groups but wish 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?
Even with gaps in your National Insurance (NI) record, you can still be eligible for the full New State Pension. A State Pension statement can provide information on how much State Pension you might receive.
You can also request a National Insurance statement from HM Revenue and Customs (HMRC) to verify if there are any gaps in your record.
If your National Insurance record has gaps that could hinder you from receiving the full New State Pension, you might have the option to:
Acquire National Insurance credits
Make voluntary National Insurance contributions
Verify your State Pension age
Use the free online tool on the GOV.UK website to check your State Pension age and determine when you can retire and start claiming your State pension.