The New State Pension: Do you need to top up your NI contributions?
Anyone reaching State Pension age after the 6th April 2016 with full entitlement currently receives a guaranteed index-linked income of £185.15 per week (£9,627.80 per annum). The triple lock guarantee means this income increases each year by the higher of a) national average earnings, b) the Consumer Prices Index (CPI), or c) 2.5%. In order to qualify for the full State Pension, you will need a complete National Insurance (NI) record of 35 years, with a minimum of 10 qualifying years to be entitled to any amount at all.
There are various reasons why someone would not have a NI record of 35 years, but if you think it might be the case it is a good idea to log into the Government Gateway website and obtain your state pension forecast. The state pension is, for most, the foundation of their retirement planning and so it is essential that this benefit is maximised where possible. The forecast will tell you how much you are currently entitled to receive and also whether any additional NI credits are required to bring you up to the full state pension. If you find that additional NI credits are required it is a good idea at this point to speak to your financial adviser as part of your retirement planning discussions. Depending on your situation and how many years you have until reaching state retirement age, there may be NI credits yet to be applied which would bring you up to the full 35 years and if so, no further action will be required.
If you still need to fill any gaps in your NI record, it is possible to make voluntary NI contributions. It is very important that you look at doing this now if you are a man born after the 5th April 1951 or a woman born after the 5th April 1953, this is because you are currently able to pay for any eligible gaps between the tax years April 2006 and April 2016 - a period of 16 years. After the 5th April 2023, this will revert to the usual six-year period.
Our advisers are always on hand to help with any questions you may have regarding retirement planning. You can contact your adviser directly or call our team on 020 8532 9610.
