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Daily Record
Daily Record
Lifestyle
Linda Howard

Full New State Pension payments during retirement means you need to work this number of years

Recent data suggests that almost half (46%) of women do not think they have saved enough money in their their pension pot for retirement, while men are much more confident in their later-life savings with only a third (35%) concerned they have not set aside enough cash.

The research from workplace pension and savings fintech Cushon, conducted as part of its new white paper, comes at a time when value for money of pensions is being questioned, with the UK Government recently consulting on the issue, and its findings due to be published. In its new white paper, Cushon is calling on the UK Government and industry to start listening to employees to drive pensions engagement and ultimately ensure better value for money.

As a result of the ongoing cost of living crisis, more than one in four (26%) large businesses are reporting an increase in the number of employees pulling out of workplace pensions, with the numbers expected to rise.

Interestingly, almost a third (30%) of female employees want higher contributions to help them save for the future during the cost of living crisis, while nearly all women (92%) agree that employer contributions are important.

Employers have a role to play in driving value for money by not only increasing their contribution rates, but also making pensions more inclusive and accessible for everyone. If employees don’t believe their pension offers value for money, there’s still a risk that they’ll opt-out or reduce saving which could impact their financial wellbeing in retirement.

Steve Watson, Director of Policy and Research at Cushon, said: “It’s hugely concerning that such a stark gender gap continues to exist in pensions. The research is clear - women understand that a massive factor on the value of their pension pot is ultimately down to how much is paid in. That’s why so many are calling on their employers to up their pension contribution levels.”

Workplace and private pensions will help bolster the State Pension in retirement, but many people may be relying on the contributory benefit as their only income in retirement. However, State Pension is not paid automatically and how much someone receives depends on how many years’ worth of National Insurance contributions made before they reached retirement age, which is currently 66 for men and women.

The State Pension age is set to increase to 67 between 2026 and 2028. A further planned rise to 68 is due to take place in the mid-2040’s, the UK Government will hold a review on this increase two years after the next general election - expected to take place next year.

State Pension currently provides essential financial support for 12.6 million older people across the country, including more than one million retirees living in Scotland. Along with any private or workplace pensions, the additional payment could provide much-needed income in later-life.

Below is our handy guide to understanding how National Insurance contributions affect the amount of State Pension you will receive in retirement and how many years you may have to work in order to qualify for any payment and the full payment - currently worth £203.85 each week.

How to get any New State Pension payment

You will need at least 10 qualifying years on your National Insurance record to qualify for any State Pension, but they don’t have to be 10 qualifying years in a row.

This means for 10 years at least one or more of the following applied to you:

  • you were working and paid National Insurance contributions

  • you were getting National Insurance credits for example if you were unemployed, ill, a parent or a carer

  • you were paying voluntary National Insurance contributions

If you have lived or worked abroad you might still be able to get some New State Pension.

You might also qualify if you have paid married women’s or widow’s reduced rate contributions - find out more about this on the GOV.UK website here.

How to get full New State Pension payments

You will need around 35 qualifying years to receive the full New State Pension if you do not have a National Insurance record before 6 April 2016 - this may be more if you were 'contracted out', find out more here. For people who have contributed between 10 and 35 years, they are entitled to a portion of the new State Pension.

State Pension may be the only source of income for some people in retirement. (Getty Images)

Qualifying years if you are working

When you are working you pay National Insurance and get a qualifying year if:

  • you’re employed and earning over £242 a week from one employer

  • you’re self-employed and paying NI contributions

You might not pay National Insurance contributions because you’re earning less than £242 a week. You may still get a qualifying year if you earn between £123 and £242 a week from one employer - find out more here.

Qualifying years if you are not working

You may get National Insurance credits if you cannot work - for example because of illness or disability, or if you’re a carer or you’re unemployed.

You can get National Insurance 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

If you are not working or getting National Insurance credits

You might be able to pay voluntary National Insurance contributions if you’re not in one of these groups but want to increase your State Pension amount. Find out more on the GOV.UK website here.

What if there are gaps in your National Insurance record?

You can have gaps in your NI record and still get the full New State Pension. You can get a State Pension statement which will tell you how much State Pension you may get. You can then apply for a National Insurance statement from HM Revenue and Customs (HMRC) to check if your record has gaps.

If you have gaps in your National Insurance record that would prevent you from getting the full New State Pension, you may be able to:

  • get National InsuranceI credits

  • make voluntary National Insurance contributions

Check your National Insurance record on GOV.UK here.

Check your State Pension age

Check your State Pension age to find out when you can retire and claim State pension using the free online tool at GOV.UK here.

This will tell you:

  • when you will reach State Pension age
  • your Pension Credit qualifying age

To keep up to date with the latest State Pension news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.

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