State pension UK: Qualifying NI contribution rules explained – will your years count?
STATE pension payments are dependant on a person's National Insurance (NI) history, with at least 10 years of contributions needed to receive any income. These years must be "qualifying" and there are rules in place which determine if contributions count or not.
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State pension payments require at least 10 years of contributions to be received and 35 years will be needed for the full amount of £175.20 per week. These NI years will need to be qualifying in nature and there are different rules for this for those who are working or not working.
People in employment will pay NI through their wages and they will receive a qualifying year if they’re:
- Employed and earning over £183 a week from one employer
- Self-employed and paying NI contributions
In some cases, a person may not pay NI contributions because they’re earning less than £183 a week but they could still get a qualifying year if they earn between £120 and £183 a week from one employer.
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Those who are not working may still get a qualifying year under certain circumstances.
Qualifying years can be received if the person cannot work because of an illness, disability, being a carer or unemployment.
For example, NI credits can be generated if a person:
- Claims child benefit for a child under 12
- Gets jobseekers allowance or employment and support allowance
- Gets carer’s allowance
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It is possible to request a state pension forecast from the government which will tell the claimant how much state pension they’ll get.
It's important to be aware that regardless of the NI record, some may still get less than the full amount.
The government states: "You may get less than the new full State Pension if you were contracted out before 6 April 2016."
Additionally, NI statements can be requested from HMRC to see if there’s any gaps in history.
Where gaps exist, people may be able to get NI credits or make voluntary contributions.
Voluntary contributions do not always guarantee an increase in state pension but the future pension centre can be contacted for guidance on this.
Voluntary contributions can usually be backdated by up to six years and both employed and self-employed workers can pay the contributions.
These voluntary contributions will be paid through either class two or class three contributions.
It will not be possible to pay voluntary contributions if a person is eligible for NI credits or is a married woman or widow paying reduced rates.
In some cases, it may even be possible to fill gaps in a NI record when a person has already reached their state pension age.
It should be noted that paying voluntary NI is not without costs as charges will be levied.
For the 2020 to 2021 tax year, voluntary class two contributions will be charged at £3.05 a week.
Class three contributions will see a charge of £15.30 a week.
These contributions can usually be paid through direct debits, banking methods, cheque or self-assessment.