State pension could be cut by gaps in your National Insurance record – check now

Investment advisor on how to get the most from your state pension

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The state pension makes up a large part of many peoples’ retirement income, but Britons could find they are left short if their NI record is not up to scratch. An online tool can help people find out where they stand.

Jeannie Boyle, Director & Chartered Financial Planner at EQ Investors, explained how National Insurance plays a crucial role in Britons’ state pension entitlement.

She said: “Your state pension is based on your National Insurance record.

“You will usually need at least 10 qualifying years on your National Insurance record to get any state pension.

“To qualify for the full State Pension, you need 35 years of National Insurance contributions (nics).”

The state pension is currently valued at £179.60 per week, allowing pensioners to pick up £9,339.20 for a full year.

Britons could find they are not entitled to the full amount if they do not have enough NI contributions on their record.

Fortunately, the Government has an online service that lets people check their record and see if there are any gaps.

This can be found via the Gov.uk website.

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Qualifying years of NI contributions can be earned in various ways, with most people doing so by paying National Insurance automatically on their wage or salary.

However, those who are unemployed can also boost their record by getting NI credits.

These credits may be available to people who receive the following benefits:

  • Child Benefit for a child under 12
  • Jobseeker’s Allowance or Employment and Support Allowance
  • Carer’s Allowance.

Another option for people who wish to improve their NI record is to make voluntary contributions.

Ms Boyle explained how this can work in practice.

She said: “If you don’t have the full 35 years, there is an opportunity to buy additional years.

“You can usually pay voluntary contributions for the past six years. The deadline is April 5 each year.”

However, she also warned that this may not be the right decision for everyone, and urged Britons to consider the following before deciding to make voluntary contributions:

“Your health: If you have reduced life expectancy, exchanging capital for lifetime income might not be the best course of action.

“Access to capital: Another consideration is the purchasing power of a lump sum compared to a relatively small uplift in your regular income.

“If the amount represents a significant percentage of your savings, it’s probably prudent to retain the funds on deposit (perhaps in an ISA) rather than exhausting them to purchase additional income.”

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