State Pension & National Insurance Rule Changes
Your New State Pension will be based on your National Insurance record when you reach State Pension age. To be eligible for any new State Pension, you usually need to have 10 qualifying years on your National Insurance record and to qualify for the full new State Pension, you need 35 qualifying years if you do not have a National Insurance record before 6 April 2016.
If you have gaps in your National Insurance (NI) contributions going back to April 2006, you have until 31 July 2023 to make voluntary national insurance (NI) contributions. The previous deadline of the 5th of April 2023 has been extended to the 31st of July 2023. If you do not have enough full years of NI contributions, this may affect your entitlement to the state pension, as well as other benefits.
In addition to the minimum of 10 years of national insurance contributions, eligibility is linked to date of birth and gender. You can claim the new State Pension at State Pension age if you are:
- a man born on or after 6 April 1951
- a woman born on or after 6 April 1953
If you reached State Pension age before 6 April 2016, these rules do not apply. You will already be eligible to get the Basic State Pension.
As a result of increases in life expectancy, the age at which you will be eligible to claim the new state pension will vary depending on when you were born. While you can check when you will reach state pension age here, in the current State Pension Age (SPA) is 66, rising to 67 between 2026 and 2028, and currently scheduled to increase to age 68 between 2044 and 2046.
You may get less than the new full State Pension if you were contracted out before 6 April 2016. To check if you were contracted out, check your old pay slips. You were contracted out if the National Insurance contributions line has the letter D or N next to it. You were not contracted out if it has a letter A. If there’s a different letter, check with your employer or pension provider. You’re more likely to have been contracted out if you worked in the public sector e.g., local council, NHS. Equally, you may get more than the new full State Pension if you would have had over a certain amount of Additional State Pension under the old rules.
National insurance contributions are typically made by employed and self-employed individuals based on their earnings. In addition to which, individuals may also receive national insurance credits in certain circumstances. These include periods when you were looking for work, periods of illness/sick leave, linked to not working while on maternity/paternity leave, not working while looking after children, while claiming working tax credit/universal credit and while being on jury duty. For further detail of National Insurance Credits, please click here.
Checking for gaps in your National Insurance Record
As your new State Pension is based on your National Insurance record when you reach State Pension age. You can check for gaps in your record on the UK Government website. The National Insurance checker will tell you:
- what you have paid up until the start of the current tax year.
- what national insurance credits that you have received.
- if you have any non-qualifying years because there are gaps in your contributions or you do not have national insurance credits for the given time period.
- if you can pay voluntary contributions to fill any gaps and how much this will cost.
If you think there are any errors in your national insurance record, contact HMRC well before the 31st of July 2023 to allow for any errors in your record to be rectified as HMRC and the Department for Work and Pensions (DWP) have experienced a recent surge in customer contact (hence the extension from the 5th of April to the 31st of July 2023).
Additional Voluntary Contributions
If you identify gaps in your contributions going back to 2006, you can make voluntary contributions between the 6th of April 2023 and the 31st of July 2023. The payment rate has been set at the voluntary NI rates for the 2022/23 tax year of £15.85 per week.
After 31st July 2023
From 1 August 2023, the timeframe for making voluntary contributions will revert to the usual six years. From that date, for the 2023/24 tax year, it will be possible to make contributions going back to the 2017/18 tax year only. Contributions will be made at higher voluntary NI rates of £17.45 per week. These higher voluntary NI rates were due to apply from 6 April 2023, but will not apply where payments are made by 31 July 2023 under the extension.
Current Pension Rates
The full rate pension payments for the 2023/2024 financial year have been set at:
Basic State Pension £156.20 per week (up from £141.85 in 2022/23) = £8,122 per annum.
New State Pension £203.85 per week (up from £185.15 in 2022/23 = £10,600 per annum.
There is no legal retirement age, and employers cannot force their employees to retire at a particular age. It’s up to you when you decide to stop working. Equally, you do not need to apply for your state pension when you reach your qualifying age. If you defer applying, you are eligible for a 1% enhancement for each 9 weeks, which equates to a 5.8% if you defer for a full year, However, it is important to note that any extra payments you get from deferring could be taxed.
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