Experts say everybody should check they are building up their State Pension entitlement or risk poverty in retirement. Here’s how to find out where you stand.
Millions will miss out on the full basic State Pension because they fail to make sufficient qualifying National Insurance (NI) contributions during their working lifetime.
The new State Pension pays a single person a maximum of £179.60 a week, or £9,339 a year, but you only get that if you make 35 years of qualifying National Insurance contributions.
Too many fall short and only realise the danger too late, while those who have made less than 10 years of NI contributions get nothing at all (but may claim means-tested top-up pension credit).
Kate Smith, head of pensions at Aegon, said people can end up with a shortfall for a host of reasons, including taking time off to raise a family, career breaks, reduced working hours and periods of unemployment.
Other factors such as working abroad or suffering long-term illness can all leave people facing a State Pension shortfall.
Failing to make enough NI contributions can cost you dear.
If you only make, say, 20 years of NI contributions, your State Pension is calculated as 20/35 of the full new State Pension, Smith said. “This would give you just over £100 a week, or just £5,206 a year.”
You do not want to discover the shortfall the day you hit State Pension age, but unfortunately many do just that, Smith added.
This means you must work out if you are set to fall short and if so, claim NI credits for the time you spent out of the workforce.
Smith said the first step is to find out your State Pension age, which is now 66 but starts to increase to 67 from 2026. Next, get a State Pension forecast. You can do both online at Gov.uk/state-pension-age.
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Have ID handy such as your passport and driving licence, and your NI number. If you do not want to do this online, you can print form BR19 from Gov.uk. Otherwise ring the Future Pension Centre on 0800 731 0175.
Stephen Lowe, retirement specialist at financial advisers Just Group, advised checking your NI contributions record to see how many qualifying years you have notched up so far. You can do this by visiting Gov.uk/check-national-insurance-record.
Lowe said you may be able to claim NI credits for any time you spent raising children under 12, provided you were registered for child benefit, or were unable to work due to maternity leave, disability or illness.
If you were a registered foster carer, or caring for at least one sick person with disabilities for at least 20 hours a week, you may also be eligible for NI credits.
Those who were unemployed and looking for work or claiming jobseekers allowance, or enrolled on approved full-time training, may also be eligible.
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You may get NI credits automatically but this is not always the case, so check. Otherwise you’ll have to apply for them. If unsure, call the NI helpline on 0300 200 3500 or +44 191 203 7010 if outside the UK.
Alternatively, Lowe said you can buy additional State Pension by making Class 3 voluntary contributions. “These cost £15.40 a week for one year’s pension, or around £800 a year. Each year you buy will boost your State Pension by around £250 a year for life. “This means that year of extra contributions pays for itself in a little over three years,” he said.
You can only go back for the previous six years so do not leave it too long to find out where you stand, and start making up any shortfall.
Lowe said charities such as Citizens Advice and Age UK, and local councils or organisations such as MoneyHelper.org.uk, can help.