I’m one of 4million people who could miss out on a state pension – how you can avoid it too
WHEN I checked my state pension forecast, I discovered that of the last nine years that I’ve been registered on the system, only two qualified towards my state pension.
While I was shocked to discover this, I’m far from alone. Over four million people missed out on a state pension qualifying year in the tax year 2018-2019, according to government figures.
There are lots of reasons that people can miss out.
For the last couple of years, I have been in full-time education, which explained the biggest gap in my record.
Then this year in April I became self-employed and haven’t yet met the threshold for National Insurance (NI) contributions leaving another hole.
An even more common reason people have gaps is because they haven’t claimed the benefits they’re entitled to, which means they miss out on NI credits.
Often this is because one or both parents earns more than £50,000, at which point you have to start paying some of the child benefit back.
Steve Webb, a partner at LCP said: “Child benefits are what allow parents to receive NI credits.
"So there are a lot of parents, mothers mostly, at home with their children not getting credits".
To get any state pension at all you need to have at least ten years worth of qualifying years on your NI record.
To get the full state pension, which is currently worth £179.60 a week or £9,339.20 a year, you need to have 35 qualifying years.
The amount you get changes over time – rising in line with the cost of living.
Under current government promises your state pension is increased by the Consumer Prices Index (CPI) measure of inflation, increasing average wages, or 2.5%, whichever is highest.
This means your state pension should be worth considerably more by the time you retire.
While there are rumours that the Triple Lock could be watered down, meaning state pensions will grow less quickly than expected, you’d still expect to see a significant rise.
How to find out what your state pension will be
I was astonished when I found out how many of the past nine years wouldn’t count towards my state pension.
But if I hadn’t checked my record, I might have reached retirement without ever knowing. I only checked because my dad, who is a qualified tax advisor, suggested it.
How much you earn plus your employment status will decide your class.
Most people who don’t meet those earning thresholds are likely to qualify for benefits, many of which confer NI credits.
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