State pension payments could be impacted by your National Insurance record – how to check

Gareth Shaw advises on building entitlement to state pension

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The state pension system is predicated on the idea of a person’s National Insurance record. This is usually built up through working life, but credits can be gained by other means also. For the new state pension, Britons usually have to have 10 qualifying years on their National Insurance record to get any sum at all. Meanwhile 35 qualifying years will be necessary for the full state pension sum, although the amount a person gets may differ if they were contracted out. There is a slight difference for individuals who are in receipt of the basic state pension – the older scheme of receiving the entitlement from the Government.

To get the full basic state pension, a total of 30 qualifying years of National Insurance contributions or credits are required, and if someone has fewer than this, it could impact the sum they ultimately receive.

State pension payments are often considered vital to individuals who are retired, as they form a key source of important income in later life.

Many are still very much reliant on the sum, despite its increasing perception as a “safety net” to other forms of saving such as a workplace or private arrangement.

For this reason, it is important to note the state pension is not an automatic entitlement or guarantee when a person reaches an eligible age.

It is at this point where the National Insurance contributions or credits a person has will ultimately determine the sum of money they receive.

The new state pension currently stands at £179.60 per week, however, this is the full sum which is offered by the DWP.

The Government has warned some Britons could receive less or more, such as if they were contracted out.

However, the key word to bear in mind when it comes to considering the state pension and National Insurance is “qualifying”.

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It is important to note, given the fact not all National Insurance contributions or credits will help Britons progress towards the goal of a larger state pension sum.

The circumstances with regard to this will depend primarily on whether a person is in work or not.

When someone is employed, a qualifying year will be fulfilled if:

• The person is employed and earning over £184 per week from one employer
• The person is self-employed and paying National Insurance contributions

However, it is not only through work that a person will be able to build up the National Insurance which is needed to qualify for a state pension sum.

Some people might not be able to work for a myriad of reasons, for example, as a result of illness or a disability, if they are unemployed, or if they are caring for another person.

This is where National Insurance credits come in to play, and they will be available in a number of different circumstances.

Child Benefit, Jobseeker’s Allowance, Carer’s Allowance and Employment & Support Allowance, for example, can all offer the opportunity for Britons to build up National Insurance credits.

If none of these circumstances apply, then there is also room for individuals to act to boost their National Insurance record.

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This can be done through paying voluntary National Insurance contributions, which a person can usually only do for gaps within the past six years.

It is worth noting, however, that this can be a potentially lengthy process, and may not always be beneficial in covering National Insurance record gaps.

Consequently, if considering this option, Britons are encouraged to contact the Future Pension Centre to see if they will benefit.

The Government also adds that some people may wish to seek financial advice before deciding to make voluntary contributions in this way.

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