Time to make more of your state pension

It may not be enough to live on, but the guaranteed income of £203.85 per week – or £10,600.20 per year – from the state pension makes a big contribution to many people’s retirement income.

You have a guaranteed, index-linked income to look forward to, one that should go up year after year, whatever happens to your other pensions. That’s the good news. The bad news is that not everyone who reaches state retirement age will get the full pension. 

Will you miss out?

To qualify for a full State Pension, an individual will need a complete National Insurance – NI – record of 35 years. A minimum of 10 qualifying years is required to be entitled to anything at all.

Start work when you leave education at 18 or 21, and work until state retirement age (currently 66 and rising to 67 between 2026 and 2028) and those 35 years should be more than covered. If you have had a spell of unemployment, you should have had the NI credits made for you as part of your benefits. But if you have had a career break, gone travelling, had a family or even worked for yourself on an informal basis, you might find that your contributions fall sadly and expensively short.

But all is not lost.

Topping up your NI credits

The good news is that it maybe possible to top up your NI account and hence your pension entitlement by making additional voluntary NI contributions.

Usually, it’s only possible to pay for gaps for the previous six years. However, men born after 5 April 1951 and women born after 5 April 1953 temporarily have an opportunity to pay for any eligible gaps between the tax years April 2006 and April 2017. This effectively creates a window of just over 17 years, but you need to be aware of the time limits involved. Fortunately, the deadline for this extended voluntary contribution opportunity has been extended to 5 April 2025.

After this date, you can still boost your credits, but only to cover the usual six-year period.

But there is a very good reason to act right away. The cost of those voluntary contributions is set to go up. 

So do you need to top up?

You can get a State Pension forecast and a copy of your NI record instantly through the Government Gateway (https://www.gov.uk/log-in-register-hmrc-online-services). It shows what State Pension you have built up and whether you need any more to receive the full entitlement.

Of course, if you have already built up enough contributions for a full entitlement, or look as though you will before you retire, your State Pension should arrive automatically when the time comes. 

If not, you need to get some expert advice without delay.

At Continuum we can provide expert advice on all aspects of pension planning, from making the most of your State Pension, to providing a detailed forecast of the kind of income you can look forward to in retirement – and ways to make you pension outlook brighter.

Topping up or simply wanting to make the most of your pension, call us today.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable retirement strategy, you should seek independent financial advice before embarking on any course of action.

The value of investments can fall as well as rise and you may get back less than you invested.

Topping up may result in a higher state pension but may reduce means tested benefits.

The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.

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