Ensure Your Retirement Security: Check Your State Pension Contributions Now
Planning for Retirement brings excitement but overlooking your State Pension can lead to Financial setbacks.
The full ‘new’ State Pension is currently £203.85 a week – however, the amount you receive depends on your ‘qualifying’ full National Insurance Years.
You also need to be aware of whether you were ‘contracted out’ at any point during your employment, pre April 2016, as you may not receive any Additional State Pension or only a small amount.
National Insurance Contributions
Your State Pension is based on National Insurance contributions, and any gaps could mean you won’t have enough years of contributions to either:
- Get a full State Pension (sometimes called ‘qualifying years’)
- Qualify for certain benefits.
To find out if you have any gaps, how much it will cost to pay voluntary contributions and if you are able to make these voluntary contributions, you can check your National Insurance record by applying on the UK Government website – https://www.gov.uk/check-national-insurance-record
It’s important to note that rules regarding buying back National Insurance contributions can change over time due to Government policies and regulations. Eligibility criteria, deadlines, costs, and other factors related to voluntary contributions may be subject to adjustments.
Current deadlines:
You can usually pay voluntary contributions for the past 6 years. The deadline is 5 April each year. E.g. you have until 5 April 2026 to make up for gaps for the tax year 2019 to 2020.
If you want to make voluntary contributions for the tax years 2016 to 2017 or 2017 to 2018, the deadline has been extended. You have until 5 April 2025 to pay.
To find out more information on eligibility, deadlines, costs etc visit the official UK Government website – https://www.gov.uk/voluntary-national-insurance-contributions
Contracted Out
Before April 2016, individuals, workplaces or Private Pension schemes could opt to ‘contract out’ of the Additional State Pension (also known as SERPS). This ceased on 5th April 2016.
Opting to ‘contract out’ meant some National Insurance Contributions were either lower or redirected into another Pension scheme. Therefore, if you reached State Pension age before 6th April you might not receive any Additional State Pension or only a small amount. However, you will still get the basic State Pension.
If you reached State Pension age on or after 6th April 2016, being contracted out might reduce your new State Pension. The reduction depends on various factors like the duration of contracting out and your earnings at the time.You can increase your State Pension by adding qualifying years to your National Insurance record. Each qualifying year from 5th April 2016, adds about £5.82 a week to your new State Pension.
To check if you were ‘contracted out’:
If you’re under State Pension Age your State Pension Forecast will include a ‘Contracted-Out Pension Equivalent’ estimate. You can request your State Pension Forecast from the official UK Government website – https://www.gov.uk/check-state-pension
If you’re over State Pension age, you will need to check your payslips from before 6th April 2016. If you have any payslips with the category letters D, E, L, N or O, then you were ‘contracted out’. You can also ask your employers or Pension providers.
To find out more information on this topic, visit the official UK Government website – https://www.gov.uk/contracted-out
Don’t leave your Retirement to chance. Seeking advice from a Financial Planner or a Pension Specialist can provide valuable insights tailored to your specific circumstances – so, please don’t hesitate to contact us.
