Martin Lewis issues £68.90 state pension boost warning | Personal Finance | Finance
MoneySavingExpert’s Martin Lewis (Image: House of Commons/UK Parliament/PA Wire)
Millions of Britons could be missing out on a £68.90-a-week boost to their retirement income because they do not have enough National Insurance (NI) contributions, Martin Lewis has warned. The warning came after a listener to his show asked about a relative approaching their 40s who had never worked, claimed benefits or built up any NI credits.
Explaining the rules, Mr Lewis said the state pension system has what he described as a “hard bottom and a soft top”, meaning there is a strict minimum threshold for getting any pension at all, but more flexibility around qualifying for the full amount. He said NI contributions can be built up through employment or through certain benefits, including credits available to some parents and carers.
Mr Lewis said: “For those who don’t know, National Insurance contributions are when you work or if you get certain benefits if you look after children, you get a National Insurance credit.
“I think of it like a token – for each year that you work, you get a National Insurance credit – a token that goes into the piggy bank.”
Mr Lewis, founder of MoneySavingExpert.com and one of Britain’s best-known consumer champions, said many people assume they need exactly 35 qualifying years to receive the full new state pension, but the position is more complicated.
He said: “I generally say you need 35 years worth-ish of National Insurance to get the full state pension. But it really is in ‘ish-’. For some people it’s more, for some people it’s less.
Our community members are treated to special offers, promotions, and adverts from us and our partners. You can check out at any time. Read our Privacy Policy
“Just because you’ve got your full state pension entitlement, doesn’t mean you stop paying National Insurance if you’re working, and you’re under state pension age.”
The full new state pension is currently worth £241.30 a week, or around £12,550 a year. In most cases, people need about 35 qualifying years of NI contributions to receive the full amount, although the exact number depends on their individual record.
However, Mr Lewis stressed there is a firm minimum threshold before any state pension is paid at all.
He said: “The bottom is a hard bottom, because to get any state pension, you need 10 years of National Insurance credits.”
Mr Lewis said people with gaps in their National Insurance record should check whether paying voluntary contributions could take them up to the minimum 10 qualifying years needed for any state pension. Someone with nine qualifying years who buys one extra year could unlock payments worth around £68.90 a week under current rates instead of receiving nothing.
Under current rules, someone who reaches the minimum 10 qualifying years could receive around £68.90 a week in state pension payments. That works out at about £3,582.80 a year.
People can usually pay voluntary NI contributions to fill gaps in their record for up to six previous tax years, although whether it represents good value depends on individual circumstances.
Mr Lewis also reminded those with little or no state pension entitlement that Pension Credit could provide valuable support.
He said: “The obvious thing for someone with no or low income is Pension Credit.
“Pension Credit is effectively a top up to any or no state pension that you get, to give you a minimum income.”
As well as boosting weekly income, Pension Credit can open the door to extra help including council tax support, housing assistance, help with NHS costs and free TV licences for eligible households aged 75 and over.
