New State Pension: In the UK, the State Pension is considered the primary source of income for most people in retirement. However, recent information has revealed that a significant number of people are still unaware of how many years of National Insurance (NI) contributions are required to fully benefit from the New State Pension.
How many years of contributions are required?
According to Department for Work and Pensions (DWP) rules, a minimum of 35 eligible years of NI contributions is required to receive the full New State Pension. A minimum of 10 eligible years of contributions is required to claim the pension.
Despite this, research has shown that 57% of adults aged 60 or older are unaware of this rule. This means that fewer than 6 in 10 people know how many years of contributions they need to receive the full pension.
Why is awareness important?
Stephen Lowe, Group Communications Director at Just Group, says:
“People should check whether they will actually receive the full new State Pension before claiming their pension. If there are gaps in their records, their NI records should be reviewed.”
He also said that in some cases, people can voluntarily make up for gaps in their records by making additional contributions (Class 3 NI Contributions). This is especially true for those who missed contributions due to maternity leave, unemployment, illness, or family care responsibilities.
How to make up for gaps in their records?
People can make up for gaps in their records by making additional payments for up to the last six tax years.
In many cases, people are also eligible for NI Credits, which can fill gaps in their records without additional cost.
This is particularly beneficial for people on maternity leave, sick, or with caring responsibilities.
Why is this information important?
According to Lowe, “The state pension is the backbone of retirement finance in the UK. But millions of people don’t receive the full amount because they don’t have enough qualifying years.”
Experts therefore recommend that everyone review their NI records before reaching pension age and make up any gaps in time. Doing so will not only increase the amount of their pension but also strengthen their financial security in retirement.