Have you done enough to get a full state pension?

David King of MJR Wealth Management does the sums.

We all joke that by the time we reach retirement age, the state pension won’t be worth having. But let’s not give up on it just yet. I’m still looking forward to getting my own pension and I know what I should get, but do you? And do you know how to make your position better if you find that you haven’t already done enough to qualify for the full amount?

Whether, and to what extent, you qualify for a state pension is determined by reference to your work history or, more accurately, your National Insurance record.

It’s relatively easy for me, as an employee with a regular income, to say that my National Insurance record is building up nicely, but for the self-employed it’s not so clear-cut. National Insurance reliefs claimed in the past could have a nasty sting in the tail when it comes to accruing qualifying years.

To get any state pension, you need to accrue a minimum of 10 qualifying years. Reach this and you'll be paid 10/35ths of the full £159.55 pw state pension, or about £45. If you don't manage to meet this minimum, you won't get a penny. To get the full £159.55 pension you’ll need to have accrued 35 qualifying years. Doing the maths, each additional qualifying year increases the pension by £4.55 per week or £237 per year.

So what is a qualifying year and what’s the issue?

  • For the self-employed, a qualifying year is one during which they have continuously paid Class 2 National Insurance.
  • Those with low earnings could (and can still) be exempted from paying Class 2 National Insurance bearing in mind low profitability in recent years. Even in a good year, capital investment may have resulted in much lower taxable profits and therefore low earnings for this purpose. Claiming exemption because of low earnings may have been sensible at the time but, not having paid the Class 2 will result in gaps in your National Insurance record and, quite possibly, a reduced state pension.

How do you know if you have a problem and, is there a fix?

As regards filling any gaps, the solution will be to make voluntary National Insurance contributions. It can cost as little as £145 to fill a gap year, which seems like a reasonable figure, bearing in mind the annual increase in state pension as a result will be £237.

If you would like to know how to request a state pension statement or a National Insurance statement, please email dk@mjrwm.co.uk for more information.


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