State pension relies largely on National Insurance contributions one made during their working lives, but what about those that never worked? While some will be entitled to a smaller portion of their pension or can rely on their partner’s, many will be missing out entirely without taking these vital steps before retirement.
State pension is a lifeline for many in retirement and although the recently announced increase was underwhelming for most, some may not see their state pension pots at all.
To qualify for state pension there is a number of National Insurance contributions that need to have been made during one’s career, and for those that spent their lives unemployed could be at risk of missing out on state pension entirely.
A minimum of 10 years’ worth of contributions are needed to get a portion of state pension in retirement. A full 30 years’ worth is needed to receive the full basic state pension amount and it’s 35 years’ worth to receive the new state pension.
Known as the ‘qualifying years’ these contributions include any time one was: employed and earning over £184 per week from one employer, self-employed and paying National Insurance contributions.
Those earning between £120 and £184 per week from one employer may still be eligible for a qualifying year.
Many who have been in on and off employment or earning below the threshold could miss out on state pension because of the gaps in their record, whether due to being ill, taking time off to care for children or relatives or living abroad.
Those with identifiable, and proven, reasons such as being permanently disabled, can still be eligible for state pension.
Additionally, one exception to this rule is if one is married or in a civil partnership and retiring under the old system before April 2016 as they could rely on their partner’s National Insurance contributions to pay for their pensions.
However, those retiring under the new system are warned that this is no longer automatically guaranteed as it forces everyone to be responsible for their own National Insurance record.
One is eligible to increase their state pension with their spouses contributions if they are not eligible for the basic state pension or receive less than £82.45 per week.
They are also able to inherit their partner’s state pension if they are not eligible for basic state pension or are receiving less than £137.60 per week.
However, if a person is single and does not qualify for state pension by other means they are able to receive their pension through voluntary National Insurance contributions.
These contributions aim to fill any gaps on one’s National Insurance record wherein they did not pay National Insurance nor receive National Insurance credits.
This can be due to being employed or self-employed but having low earnings, being unemployed and not claiming benefits or living outside of the UK.
Those reaching retirement age are encouraged to check their National Insurance record on the government website to find if they have any gaps, whether they could pay voluntary contributions and how much it will cost if needed.
Those receiving Jobseeker’s Allowance who are not in education or work for 16 hours or more per week automatically receive Class one credits.
Class one credits are also automatically awarded for those on Employment and Support Allowance, Unemployability Supplement or Allowance or Maternity Allowance.
Parents registered for Child Benefit with a child under 12, even if they do not receive the benefit, automatically receive Class three credits.
Carers receiving Carer’s Allowance receive Class one credits whilst those on Income Support providing regular care receive Class three credits.
This is not a complete list, and the other eligibility requirements for National Insurance credits can be found on the Gov.uk website.