Improving your State Pension

Individuals who are nearing retirement age can check what their entitlement to a State Pension will be by contacting HMRC for a pension forecast. This forecast will provide details of your state pension position based on your national insurance contributions (“NIC”) record and will show whether or not there are any gaps that need to be filled. In general terms, to qualify for the new State Pension, you have to have a minimum of 10 qualifying years but to qualify for the full new State Pension, you need to have 35 qualifying years. If you have between 10 and 35 qualifying years, you will receive a proportion based on the actual number of qualifying years. The new State Pension applies to men born from 6 April 1951 and women born from 6 April 1953. If you were born before these dates, the old basic State Pension rules apply. Depending on your individual circumstances, you may be eligible to pay voluntary Class 3 contributions to enhance your pension entitlement, although it should be noted that paying voluntary contributions does not always increase your State Pension position. This is why it is important to establish what your expected entitlement is before making any voluntary contributions and whether or not, taking your personal circumstances into account, it would be worthwhile. You cannot pay voluntary Class 3 contributions if you are entitled to NIC credits or if you are a married woman or widow who holds a valid election to pay reduced rate NIC. You can use the new HMRC online Personal Tax Account (“PTA”) system to check you NIC record to see if there are any gaps in your qualifying years and whether or not you can pay voluntary contributions for any of those gaps. For years that voluntary contributions can be paid, the PTA system will also advise how much you will need to pay although will not be able to tell you how much pension you will receive. You can apply for a State Pension forecast for a more detailed report of your pension entitlement and potential gaps within your NIC record at https://www.gov.uk/check-state-pension or by completing a BR19 application form and forwarding this to Newcastle Pension Centre, Futures Group, The Pension Service 9, Mail Handling Site A, Wolverhampton, WV98 1LU. There are time limits for paying voluntary Class 3 contributions and you can usually only pay gaps in your record covering the past 6 tax years. In addition, higher rates for some of these years can also apply. However, depending on your age, it may be possible that you can pay for gaps years that go back more than 6 years and the rates you pay can also be different to the normal higher rate rules. Finally, it is also worth noting that the State Pension age is under review and could change in the future.