State pension warning: Are your National Insurance contributions valid? Check now

Budget 2021: Experts outline state pension changes

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The amount of state pension people are entitled to when they retire depends on how many ‘qualifying years’ of National Insurance contributions they have accumulated. These are built up over people’s working lives, and typically depend on how many years someone has worked.

However, it is also possible to earn qualifying years via NI credits, which are given to people who have not worked but have contributed in other ways such as by raising a family, caring for someone who is sick or has a disability, or being enrolled in full-time training.

People who are unsure how many qualifying years they have can find out by checking the Government’s website or calling the NI helpline on 0300 200 3500.

Another factor which determines how much state pension people can get is when they were born. This is because a new pension system was introduced in April 2016, meaning people who retired or who will retire after this date will be subject to the new rules.

People who retired on or after April 6, 2016 will currently get a state pension of up to £179.60 per week. This adds up to £9,339.20 a year.

Those who retired pre-April 2016 can currently receive a maximum ‘basic’ (or old) state pension of £137.60 a week. This provides £7,155.20 per year.

Britons can currently begin receiving their state pension from age 66.

The rules regarding how many NI qualifying years people need to receive a full state pension are different depending on whether someone falls under the old or new system.

People who retired on or after April 6, 2016 need 35 years of qualifying years.

For those who retired before this, it is a little more complicated, and depends on when they specifically retired.

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Britons who reached state pension age on or after 6 April 2010 will need 30 years to get the full state pension.

On the other hand, people who reached state pension age before that time require a different number of qualifying years depending on whether they are a man or a woman. Men need 44 years, while women need 39 years.

Things get more complex for people who started work before 2016 but will reach state pension age after 2016, as their number of qualifying years will be calculated based on ‘transitional rules’.

People in this situation can contact the pension service to find out exactly how many years of NI contributions they need to get the full state pension.

There are also thresholds for how many years of NI contributions people need to get any state pension at all.

To get any state pension, people need a minimum of 10 qualifying years. Someone who does this will get 10/35ths of the total amount available, because 35 years are needed for the full amount.

This would currently entitle someone to around £51 per week.

It is worth noting that qualifying years can be from before or after April 6, 2016 and do not have to be from consecutive years.

However, Britons should be warned that some years in which they paid NI will not count when calculating how much they are entitled to because they are not deemed to be ‘full’ years.

This could easily catch people out and mean they get less state pension than they imagined.

For a ‘full’ qualifying year, people generally need to pick up a minimum amount of money during a tax year and then pay the required NI contributions on that amount.

For the 2021/22 tax year, these thresholds are £120 per week, £520 per month and £6,240 per year for employees, or £125 per week, £542 per month and £6,515 per year for those who are self-employed.

The good news is that people who work full-time are likely to earn a qualifying year even if they are on the minimum wage or work only a few days per week.

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