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.

David Prosser
By David Prosser
published

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.

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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.

David Prosser
David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.

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