The State Pension forms the very foundation of our retirement income.
People retiring today can get up to £11,502 per year.
But, many don’t get the full amount due to gaps in their National Insurance (NI) record. This can be for a range of reasons from unemployment to working abroad.
However, there are things you can do now to boost your State Pension before the 5 April deadline.
The triple lock aims to increase the State Pension by the highest of 2.5%, average earnings growth or CPI inflation every year and has led to some blockbusting increases in recent years.
This article isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice. Remember, pension and tax rules can change, and any benefits depend on individual circumstances.
How to boost your State Pension
You usually need 10 years’ worth of NI contributions to get any State Pension and 35 years’ worth to get the full amount, for men born after 5 April 1951 and women born after 5 April 1953.
A good place to start is by getting a State Pension forecast which will tell you how much you’re on track to receive and alert you to any gaps in your record.
If you do have gaps, then check that the Department for Work and Pensions’ (DWP) records are correct. If there are any errors, you have time to get them rectified.
Secondly, if you qualified for a benefit that comes with an NI credit during one of these gaps, you can put in a backdated claim. Child Benefit for under 12s and Jobseekers Allowance are just a couple of examples of these benefits.
You also have the option to buy NI credits.
You can usually do this to fill gaps going back up to six tax years. But if you’re a man born after 6 April 1951 or a woman born after 6 April 1953, you might find you can fill gaps going back as far as 2006.
This is a great opportunity, but the deadline to take advantage closes on 5 April – it’s important to act before it’s too late.
You can buy the credits over the phone or online. It usually costs around £824 to fill each year. However, before handing over any money, it’s important to check with the government’s Future Pension Centre that you really will benefit.
If you were contracted out before April 2016, you might find that you receive less State Pension, but paying for extra years won’t increase what you receive.
Contracting out is a hangover from the old basic State Pension system where you could get an income top-up called the State Second Pension.
However, you could ‘contract out’ of this in return for paying less NI. You often received a top up to your workplace pension instead, but because you paid less NI, you get less State Pension.
The age at which you can claim the State Pension, and how much you’ll get, is different for everyone. Download our guide to find out:
When you can claim the State Pension
How much income you might get
What happens if you were contracted out
Ways to boost your State Pension income
Plus much more
What if the State Pension isn’t enough?
The latest data from HL’s Savings and Resilience Barometer shows only 36% of households are on track for a ‘moderate’ retirement income.
While the State Pension is the backbone of people’s retirement income, it’s important you supplement it with your own retirement savings. This could be through a workplace pension or a private pension like a Self-Invested Personal Pension (SIPP).
Small actions like upping your pension contributions when you get a pay rise or new job is one way to boost your contributions.
You should also make sure you’re making the most of any contributions your employer is making.
You usually can’t access a workplace or private pension until age 55 (rising to 57 in 2028).
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