State pension rules will see millions of Brits miss out on huge £900 DWP rise in April | Personal Finance | Finance
State pensioners will see their payments increase by up to £900 in April but millions of people will not get the full increase.
Those on the full new state pension will see their payments increase from £203.85 a week (or £10,600 a year) to £221.20 a week (£11,502 a year).
But many will miss out on the full increase. This includes those on the basic state pension, which pays a lower full rate of £156.20. This will increase to £169.50 a week, or £8814 a year, an increase of just £691.60 a year.
People may also not get the full £900 increase if their state pension is not on the full amount because they are missing National Insurance contributions.
A DWP spokesperson said: “People may not qualify for the state pension for a number of reasons including if they haven’t paid enough National Insurance contributions or received enough National Insurance credits.
“Those who do not receive a state pension can still claim Pension Credit which is designed to help with daily living costs for people over state pension age and on a low income, though you do not need to be in receipt of state pension to get it.”
A person needs at least 10 years of NI contributions to receive any level of state pension when they reach state pension age, which is currently 66.
How much National Insurance contributions do you need for a state pension?
New state pension (for anyone who reaches retirement age after April 6, 2016)
You usually need 35 qualifying years of National Insurance contributions or credits to get the full amount of the new state pension. You need at least 10 qualifying years on your NI record to get any state pension at all.
You will get a proportion of the new state pension if you have between 10 and 35 qualifying years. If some of the years were under the old rules before April 6, 2016, this will be used to calculate your starting amount. It will be the higher of either:
Your starting amount will include a deduction if you were contracted out of the additional state pension. You may have been contracted out because you were in a certain type of workplace, personal or stakeholder pension.
If your starting amount is less than the full new state pension, you can top it up until you reach that level or are of state pension age – whichever is first.
On the other hand, if your starting amount is more than the full full new state pension, the part above that level is called a protected payment and will be paid on top of your full new state pension.
Those who had no National Insurance contributions or credits before April 6, 2016, will receive an amount calculated entirely under the full new state pension rules.
Basic state pension (for anyone who reached retirement age before April 6, 2016)
To get the full basic state pension, you need a certain number of qualifying years of National Insurance.
If you’re a man you usually need:
- 30 qualifying years if you were born between 1945 and 1951
- 44 qualifying years if you were born before 1945.
If you’re a woman you usually need:
- 30 qualifying years if you were born between 1950 and 1953
- 39 qualifying years if were born before 1950.
If you have fewer than the full number of qualifying years, your basic state pension will be less than £156.20 per week. You can check your National Insurance record here to find out how many qualifying years you have.
Gary Smith, partner in financial planning and retirement specialist at UK wealth manager Evelyn Partners, said: “The guaranteed and inflation-linked nature of the state pension is a very valuable benefit that the vast majority of retirees can’t afford to miss out on. So for some to receive the full amount, that might mean checking and topping up National Insurance contributions.
“As defined contribution pots are taking over from defined benefit schemes, the state pension becomes even more precious, as it provides a stable bedrock of income, which can be built upon with private funds from drawdown or an annuity, or a combination of the two.
“The debate over the triple lock will go on through the Spring Budget, the election and beyond. While it might seem unjust to younger cohorts today, you can be sure that when they retire, if the state pension has continued to rise by at least inflation, they will then be eternally grateful.”
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