State pension: Pensioner asks ‘who’s going to pay?’
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Britons could see their state pension payments rise by making further National Insurance contributions. Currently, the full new state pension is worth £185.15 per week, however some individuals are missing out on this due to gaps in their record.
To get the full new state pension, taxpayers need to have 35 years of National Insurance contributions and 30 years for the old state pension.
To get any of the full new state pension, Britons need at least 10 qualifying years of National Insurance contributions.
Anyone can get a state pension forecast which will tell them how much they will get paid once they hit retirement age.
The full new state pension is £185.15 per week while those on the old state pension get a weekly amount of £141.85 per week.
The reason some people have gaps in their National Insurance record is due to being out of the workforce for a period of time.
Usually, those thinking about retirement are able to fill gaps in their National Insurance record up to six years after the year in question under normal rules.
After that point, the year becomes a permanent gap in someone’s National Insurance record which could impact their ability to get the full state pension.
However a recent Government scheme allows people to fill in gaps in their National Insurance record from further back.
This means 2016/17 would normally be the oldest year which could be filled in 2022/23.
If someone has gaps in their record, they can see if they are eligible for National Insurance credits which can automatically boost someone’s eventual state pension amount.
Vulnerable groups are able to do this, for example those on certain benefits get Class 1 credits automatically while unpaid carers could be eligible for Carer’s Credit.
Alternatively, those approaching retirement could make voluntary contributions to their record to help hike their state pension.
As it stands, the cost of voluntary Class 3 National Insurance contributions is £15.85 per week or £824.20 per year.
This can add up to 1/35 of the full rate of someone’s eventual state pension which equates to a boost of £5.29 per week or around £275 per year.
Steve Webb, a partner at LCP and former pensions minister, shared how those approaching retirement can boost their state pension payments by using this method.
Mr Webb explained: “For many people, paying voluntary National Insurance contributions can be great value for money and can help them boost their state pension in a cost-effective way.
“For people with gaps in their National Insurance record going back more than six years, the window to fill those gaps will soon close.
“Some people have gaping holes in their NI record and this will be the last chance to fill them.
“Although topping up is not the right answer for everyone, and people should always check with DWP before handing over any money, for some people this could be by far the best rate of return they could get on any spare capital.
“Missing out could cost some workers thousands of pounds.”
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