State pension: Check your National Insurance record as some contributions may not count
Retirement expert advises people to learn about state pensions
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National Insurance (NI) plays a significant role in determining how much state pension people can get. Some Britons are facing a shock when they retire as they find some of their contributions did not count.
The more qualifying years of National Insurance contributions someone has on their record, the more state pension they can get.
Currently, the full new state pension is worth £179.60 per week, or £9,339.20 per year.
However, Britons may need 35 years’ worth of qualifying years on their National Insurance record in order to get the full amount when they reach state pension age.
These 35 years can be from any point in an individual’s working life, and they do not have to be consecutive.
The state pension age stands at 66, but will increase to 67 by 2028 and 68 by 2046.
To get any state pension at all, an individual must have at least 10 qualifying years on their National Insurance record.
Qualifying years are most commonly earned by paying National Insurance contributions through employment or self-employment.
However, just because someone has paid National Insurance in a given year, it does not automatically mean they have earned a qualifying year.
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This is because they must earn a certain amount of income, and then pay National Insurance on it, to get a qualifying year.
Employees must earn £120 a week, £520 a month or £6,240 a year for the 2021/22 tax year in order to earn a qualifying year.
This means people who are on low incomes or in part-time work could be at risk of assuming they have earned qualifying years towards their state pension, but in reality they have not.
Self-employed people must earn slightly more than employed individuals to get a qualifying year.
They will need to earn £125 per week, £542 a month or £6,515 per year.
The self-employed could be vulnerable to issues with their National Insurance record if their income fluctuates considerably from one year to the next.
This could mean they earn a qualifying year during some tax periods, but not others.
The good news is that it is easy to check someone’s National Insurance record online, helping Britons to avoid any nasty surprises when they reach state pension age.
The Government website can be used to view the following information:
- How much National Insurance someone has paid up to the start of the current tax year
- Any National Insurance credits they have received
- If there are any gaps in their contributions or credits, meaning some years do not count
- If they can pay voluntary contributions to fill any gaps and how much this will cost.
National Insurance credits are awarded to people who receive certain benefits, and can help to fill gaps in someone’s record where they did not get a qualifying year through working.
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