How do I obtain full state pension?

In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of National Insurance (“NI”) contributions. For part payment of the ‘new state pension’ a person must have contributed for at least 10 years.

NI contributions are typically made by employed and self-employed individuals based on their earnings. These NI contributions or credits make up a person’s NI history, which may affect entitlement to the state pension as well as other benefits, such as employment and support allowance.

Depending on your income levels you may not have been required to make NI contributions and therefore, may not have obtained enough qualifying years towards state pension. This is particularly applicable to individuals who have relied on rental or investment income for a number of years which are not subject to NI.  

Important action to take before 31 July 2023

Individuals intending to claim the State Pension in the future should check, before 31 July 2023 (was previously 5 April 2023 but this deadline was extended 4 months by the government on 7 March 2023), their NI record for gaps. Transitional arrangements ending on 31 July 2023 currently mean that voluntary NI contributions can be made as far back as 2006, rather than the usual six years. If individuals have not contributed enough prior to reaching state pension age, they may not be able to claim state pension, or receive the full state pension amount.

We would advise that you check your state pension forecast before 31 July 2023 – please see below for instructions.

How to check your current state pension forecast?

The simplest way to check your current state pension forecast is by logging into your personal tax account and following the link: Check your National Insurance record – GOV.UK (www.gov.uk). This will provide you with a breakdown of your current state pension forecast, highlight any shortfalls and whether this can be improved by making further contributions.

If you do not already have a personal tax account you will need to follow the link: Personal tax account: sign in or set up – GOV.UK (www.gov.uk) please read through and follow the instructions on screen. You will need access to personal documents such as a P60, bank statement, passport or driving license. Once you have created your personal tax account please follow the link above.

If you are digitally excluded and/or are unable to create a personal tax online you can send a paper form BR19 to the Department for Work & Pensions and they will send you a paper copy of your state pension forecast.

Already at state pension age?

It is still important to check whether there are any gaps if you are already at state pension age. You will need to follow the link: https://www.gov.uk/check-national-insurance-record by using your personal tax account login details.

What if I have gaps in my record?

If you’re not predicted to get the full amount of £185.15 a week, you need to check for gaps in your NI record.

Some individuals may have gaps in their record if they have not received NI credits or have not paid any, or sufficient, NI in some years, such as through employment or self-employment. Where there are gaps in an individual’s NI record, voluntary NICs can be paid in order to obtain a higher State Pension entitlement or entitlement to other state benefits.

Voluntary contributions can usually only be paid for the past six years.

• This means that gaps for the tax year 2016-17 must be made up by 5 April 2023.

There is an exception to this six-year rule for:

• Men born after 5 April 1951.
• Women born after 5 April 1953.

Such individuals have until 31 July 2023 to pay voluntary contributions for gaps in NIC records between April 2006 and April 2016.

• Individuals at or close state pension age will find it relatively straightforward to check if making voluntary contributions will help. If your state pension is, or is forecast to be, less than £185.15 a week, and you won’t be able to plug gaps by any other means, for example you are no longer employed or self-employed, it may well be sensible to make voluntary NI contributions.
• For individuals further away from state pension age, it is dependant of each individual circumstance you may still fill the gaps by other means such as employment or self-employment income. The checks above show how many years you already have, and how many are left. If a shortfall is likely and you have NI gaps for 2006 to 2016, you need to decide by the deadline of 31 July 2023 whether to top up.

Changes from 1 August 2023

From 1 August 2023, the timeframe for making voluntary contributions will revert to the normal six years. This means that from 1 August 2023, it will be possible to make contributions going back to the 2017/18 tax year only.

How Simpson Wood can help

If you have gaps in your state pension record please get in touch straight away. Simpson Wood can help identify which tax years can be captured through voluntary contributions and illustrate the benefits available by making voluntary contributions.

As well as ensuring your state pension is maximised our team of financial planners can complete a holistic financial review including a review of your private pensions to ensure you are maximising your future and working towards financial freedom.

Please do not hesitate to get in touch with a member of the team on 01484 534431 if you do have any queries.