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Edinburgh Live

National

Linda Howard & Abbie Meehan

Age groups hit hardest by cost of living crisis and who gets full State Pension

National Insurance NI (Organization) Hargreaves Lansdown Insurance Queen Elizabeth II

Over-50s could be heading for a retirement full of financial troubles, as a new report reveals which age groups will be hit the hardest by the cost of living crisis.

Edinburgh University's Smart Data Foundry conducted research that found economic inactivity rates have risen by a third for those aged 50 and above since 2019, reports the Daily Record. The findings have also discovered that people aged 50 to 54 could experience double amounts of financial vulnerability compared to those aged 70 to 74.

Inflation rates soaring at a record rate, and insanely high energy bills are leaving those, within retirement age, facing the "perfect storm" of ill-health and redundancy combined with lack of pension provisions and savings. This is according to the leading UK data scientists.

A recent survey of 1,000 people carried out by Opinium on behalf of Hargreaves Lansdown has suggested that over a third (34 percent) of workers aged between 45-54 have zero plan in place for their remaining years in work. This is in comparison to approximately 25 percent of those aged between 35-44 and 25-34-year-olds who have no plan between the time they turn 50, and retirement.

Some 42 percent of those in the 45-54 age group have said they plan to continue in their current job, and work full-time. A further 10 percent have said they'd stay in the same role, but move to part-time work - and only five per cent said they'd plan to stop working completely.

Commenting on the research at the time, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “These findings point to a worrying lack of planning among those closest to retirement on how they plan to spend their remaining working years.

"The pandemic may well have played a part in this with the economic upheaval potentially causing chaos for people’s retirement planning with many older workers retiring early after being made redundant."

She continued: "There’s also the chance that the investment market volatility we saw earlier in the pandemic has had an impact on people’s pensions causing them to put off their plans for retirement a while longer.

“Easing into retirement by working part time is often a better way of managing such a huge change from a financial and emotional wellbeing perspective.”

This research may well be encouraging for those with a workplace or private pension, but for many who didn't meet the £10,000 minimum requirement for opt-in, or who didn't opt-in at all, it spells trouble. A State Pension may be their best option for retirement income, but eligibility is not automatic.

State Pension is a contributory payment and in 2019, data from the Department for Work and Pensions (DWP) revealed that of the 1.1 million people who claim the new State Pension - just under 500,000 (44 percent) - receive the full amount of £185.15 each week.

The amount of State Pension you would receive all depends on how long you would have been making National Insurance (NI) contributions towards it. In October 2020, the UK Government raised the State Pension age to 66 for all, and plans have been put in place to increase it to 68.

So, how many years of NI contributions is needed to qualify for the full, "new" State Pension credit?

You will need at least 10 qualifying years on your NI record to get any State Pension and they don’t have to be 10 qualifying years in a row.

This means that for 10 years, at least one of these criteria applied to you:

you were working and paid NI contributions
you were getting NI credits for example if you were unemployed, ill, a parent or a carer
you were paying voluntary NI contributions

If you have lived or worked abroad you might still be able to get some new State Pension. You could also qualify if you have paid married women's or widow's reduced rate contributions.

You will need 35 qualifying years to receive the new full State Pension if you do not have a NI record before 6 April 2016. Those who have contributed between 10 and 35 years will receive a portion of State Pension, but not the full amount.

More information is available below.

What counts as a qualifying year of work?

Qualifying years if you are working

When you’re working, you pay NI and get a qualifying year if:

you’re employed and earning over £190 a week from one employer
you’re self-employed and paying NI contributions

You might not pay NI contributions because you’re earning less than £190 a week. You may still get a qualifying year if you earn between £123 and £190 a week from one employer.

Qualifying years if you are not working

You could be getting NI credits if you aren't working, due to things like illness or disability, if you are a carer, or unemployed.

You can get NI credits if you:

claim Child Benefit for a child under 12 (or under 16 before 2010)
get Jobseeker’s Allowance or Employment and Support Allowance
receive Carer’s Allowance

What happens if I am not working, or getting NI credits?

You could pay voluntary NI contributions if you are not in one of the above groups, but still want to increase your State Pension amount. Find out more on the GOV.UK website here.

What if there are gaps in my NI record?

You can still receive the full State Pension amount, even if there are gaps in your NI record. A State Pension statement will tell you how much you are entitled to.

You can apply for a NI statement from the HM Revenue and Customs (HMRC) website to see if you have any gaps. If you have gaps in your NI record that would prevent you from getting the full new State Pension, you may be able to: