Why you should keep a close eye on your National Insurance contributions

The state pension now requires a 35-year record of National Insurance payments to get the maximum payment. Check your record is correct, because any missing contributions can prove costly.

Less than half the people who have retired since the introduction of the new state pension in April 2016 are eligible to claim the full value of the benefit, government statistics reveal.

Data just released on the 1.1 million Britons receiving this benefit shows that only 44% are being paid the headline rate of £168.60 a week. By contrast, two-thirds of people who retired before April 2016 and receive the old basic state pension get the full amount.

So what's going on? The shortfall reflects the fact that while claimants for the basic state pension only had to make 30 years of National Insurance contributions to get the full amount, the new version of the benefit requires a 35-year record of National Insurance payments for the maximum payment.

Missing out can prove costly, so pension experts are urging more people to ask the Department for Work and Pensions for a state pension statement well before they're due to retire.

This will enable you to check that your record is correct both that all the years in which you've paid NI have been counted and that you have been given National Insurance credits for periods when you were eligible for this support. These would include a spell of ill-health or unemployment. Keep in mind too that you have the option of making voluntary NI contributions to top up your record.

Recommended

Cash-poor homeowners should beware of equity-release
Equity release

Cash-poor homeowners should beware of equity-release

Struggling savers should think twice before using equity release schemes to tap their homes for money.
24 Nov 2020
Pension dashboard remains on the drawing board
Pensions

Pension dashboard remains on the drawing board

Online pension dashboards, first unveiled by the government in 2016, are unlikely to be available until 2023, the Department for Work and Pensions has…
20 Nov 2020
Why house deposits and pensions don’t mix
Pensions

Why house deposits and pensions don’t mix

First-time buyers should not be able to raid their pension savings to pay for a house deposit.
26 Oct 2020
How excessive fees can fleece pension savers
Pensions

How excessive fees can fleece pension savers

Pension savers could be paying tens of thousands of pounds in unnecessary charges over the course of a lifetime.
26 Oct 2020

Most Popular

Jim Mellon: the world is on the brink of three major revolutions
Share tips

Jim Mellon: the world is on the brink of three major revolutions

Jim Mellon has been giving MoneyWeek’s readers lucrative ideas ever since our very first issue. He tells Merryn Somerset Webb how he sees the next 20 …
5 Nov 2020
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
6 Nov 2020
November 2020 update: how the MoneyWeek investment trust portfolio has fared
Investment trust model portfolio

November 2020 update: how the MoneyWeek investment trust portfolio has fared

How have our favourite investment trusts been doing? And what would we change?
6 Nov 2020