State pension: Savers will need to pay NI even when they hit 35 years – check your record

Martin Lewis provides advice on tracking down lost pensions

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State pension payments can be varied by a person’s NI record, with a full amount of £175.20 per week awarded to those who have at least 35 years of contributions under their belts. NI is usually built up throughout a person’s working life but even where a person reaches that benchmark, they will still have NI obligations.

Those who have paid 35 years of NI contributions before retiring will still need to pay NI up until they reach their state pension age.

Currently, the state pension age is 66 for most people.

However, the Government will be extending it to 67 between 2026 and 2028.

Beyond this, it will be increasing to 68 by 2048.

Once a person reaches state pension age they will no longer need to pay NI, regardless of whether they actually claim a state pension.

It should be noted state pensions will not be paid out when a person reaches their state pension age, they’ll need to be claimed.

State pensions can be claimed up to four months before reaching state pension age.

Claims can be made online, over the phone or through the post.

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When a state pension is claimed, it can take up to five weeks for payments to arrive and beyond this, they’ll be paid every four weeks.

The actual payment day of the week will depend on a person’s NI number.

The final two digits of the NI number will determine when the money comes through, as detailed below:

  • 00 to 19 – Monday
  • 20 to 39 – Tuesday
  • 40 to 59 – Wednesday
  • 60 to 79 – Thursday
  • 80 to 99 – Friday

NI is also not the only tax cost state pensioners need to be aware of.

State pensions are treated as earned income for income tax purposes, meaning the payments could raise what is due.

The amount of income tax a person pays is dependent on their gross income, which includes income from all sources including state pensions, earnings and private pensions.

Income tax is not levied on gross income up to the personal allowance, which is £12,500 for the current tax year.

Beyond personal allowances, the amount of income tax levied will be dependent on a person’s income levels.

Basic rate taxpayers, those who earn between £12,501 to £50,000, will face a tax rate of 20 percent.

This will rise to 40 percent for those earning between £50,001 and £150,000, with anything over £150,000 will face a charge of 45 percent.

For those who are unsure of their NI record, the Government provides free-to-use tools on their website which allow people to see how many qualifying years they have and check on what they’ll get in retirement.

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