Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Why won’t I qualify for the full state pension?
I’m 66 on 19 June 2021 and therefore will qualify to draw my state pension. Based on my National Insurance record up to
5 April 2020, my state pension is forecast to be £146.49 per week, while if I contribute until 5 April 2021 it will be £151.50 per week. I’m told I have 47 years’ NI contributions.
I had some years when the company I worked for ‘contracted-out’ and I paid into a personal pension plan, but if as they tell me I have 47 years’ NI contributions, why am I not entitled to the full state pension?
The state pension age in the UK is currently 66, with a maximum flat-rate amount of £175.20 per week payable to those who qualify. However, not everyone will be entitled to the full flat-rate state pension.
You need to have a National Insurance contribution record of 35 years to qualify for the full amount, and at least a 10-year record to qualify for some state pension.
For each year below 35 years’ NI contributions you have, the Department for Work and Pensions will make a deduction to the amount of state pension you will receive.
For example, someone with a 20-year NI record who became entitled to the state pension in 2020/21 would receive 20/35ths of £175.20, or £100.11 per week.
The most common way to build up an NI contributions record is through earning a salary. When you’re working you pay NI and get a qualifying year if you’re employed and earning over £183 a week from one employer, or you’re self-employed and paying NI contributions.
You might not pay NI contributions if you’re earning less than £183 a week, but you may still get a qualifying year if you earn between £120 and £183 a week from one employer.
You can also get NI credits in a variety of circumstances, including if you claim child benefit for a child under 12, get jobseeker allowance or employment and support allowance, or get carer allowance.
Before the introduction of the ‘new’ flat rate in April 2016, the state pension was made up of two parts – the ‘basic’ state pension and ‘additional’ state pension.
It was possible to ‘contract-out’ of the additional state pension, which meant you paid a lower rate of NI and in turn received private pension provision in place of some or all of your entitlement to the additional state pension.
For each year someone was contracted-out, a deduction would be made to their state pension entitlement. It is possible this is what has happened in your case.
You can find out if you were contracted-out by speaking to the pension scheme of your previous employer. If you don’t know your scheme’s contact details, this Government tool could help.
It is possible the state pension forecast you checked has made a mistake. Once you’ve armed yourself with details of your NI record, it’s worth calling DWP directly to explain your situation and make sure they have calculated your entitlement correctly.
Please note, we only provide information and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.