If you are working now and were born after 6 April 1951 for men, or 6 April 1953 for women, the New State Pension will likely take care of itself and deliver you a regular payment when you reach the government’s State Pension age.
For me with my particular date of birth, that age is 67 and, at today’s rate, I’m expecting a payment of £8,546 per year. That works out at just over £712 per month which, I must admit, isn’t much. But a couple of years after me, my wife will reach the State Pension age and she’ll get it too, so our combined pension from the state will likely be £17,092.
Your National Insurance contribution record
The only way the pension we get can be lower is if either one of us has an incomplete record of qualifying annual National Insurance (NI) contributions. You need to have made 10 qualifying years of NI contributions to get a pension from the state, albeit at a reduced rate, and you need 35 qualifying years to get the full New State Pension at the rate I mentioned earlier.
If you’ve always worked and continue to work and pay NI contributions, or had top-up benefits because of low wages, you should be fine. It’s likely that most years you worked counted as a full contribution because of what you paid in yourself or because of National Insurance Credits, which mark your account as if you’d paid a full contribution during the year. And even if you couldn’t work because of illness, disability, unemployment, or because you were caring for someone, you are likely to have earned National Insurance Credits as long as you were claiming the appropriate benefits. You can read more about the rules on the GOV.UK website.
Have you slipped through the net?
However, some people do slip through the net and fail to earn National Insurance Credits even when they haven’t been able to pay NI contributions themselves. I reckon that situation is most likely to arise because of not claiming benefits when you qualify for them and because of low income from either self-employment or employment when you are not earning enough to pay NI contributions. In situations like that, if you fail to claim top-up benefits, it’s unlikely that you’ll get NI credits either – such is the crazy system that we live with in the UK. If you don’t claim when you can, you could miss out twice and end up with a smaller New State Pension.
You can get a State Pension forecast on the government website to see where you stand. It will tell you how much your New State Pension is likely to be when you retire and it will provide details of your NI contribution record. Click here for more information.
But even getting the full New State Pension won’t give me and my wife much to live on, so we are both working hard and building up additional funds that we plan to draw on alongside our New State Pension income. And you can do that too. If you haven’t yet started saving for retirement the time is right for you to begin now, whatever age you are. The earlier you start regular saving and investing, the easier it will be to accumulate enough to live comfortably in your retirement.