The state pension is the bedrock of retirement for many, so it is important for people to get as much as they can out of it. By improving their National Insurance (NI) record, Britons could access more income in retirement.
Why is National Insurance record important?
The amount of state pension someone can get when they reach state pension age is directly linked to their National Insurance record.
Currently, the state pension age is 66, but it is set to rise to 67 by 2028 and again to 68 by 2046.
The more qualifying years a person has on their National Insurance record, the more state pension they can get.
Qualifying years through working
Most people who work pay National Insurance, but there are specific requirements someone must fill to earn a qualifying year.
Britons will earn a qualifying year through paying National Insurance if they are either:
- Employed and earning over £184 a week from one employer
- Self-employed and paying National Insurance contributions.
If the above criteria are not met, an individual may not get a qualifying year even if they paid National Insurance.
However, someone may still get a qualifying year if they earn between £120 and £184 a week from one employer.
Qualifying years for unemployed people
People who do not work may be able to claim National Insurance credits, which would then provide them with a qualifying year.
However, they must claim certain benefits to qualify for National Insurance credits.
Claimants of the following benefits may be eligible for National Insurance credits:
- Child Benefit for a child under 12
- Jobseeker’s Allowance or Employment and Support Allowance
- Carer’s Allowance.
There is also a third option available to people who do not work and also do not claim any of the above benefits.
It may be possible for these people to earn qualifying years by paying voluntary National Insurance contributions, and therefore increase their state pension entitlement.
This option may also be suitable for someone who has previously worked or claimed National Insurance credits, but wants to fill in gaps in their record.
Britons can use the Government website to find out if there are any gaps in their record and how much state pension they may be entitled to.