Time is running out for women to repair their State Pension entitlement

Simon Warne, Partner, Private Client

Many who are considering their retirement options usually ‘factor in’ an expected receipt of a full State Pension but not everyone qualifies for the full amount. A full State Pension is currently £9,627 per annum and can form a significant component of an individual’s forecast retirement income. In order to qualify for the full amount (generally speaking) a person must have 35 ‘qualifying years’ of national insurance (NI) contributions. In order to qualify for any State Pension at all, a person must have contributed for at least 10 years.

‘Qualifying Years’ are usually recorded through paid work in the UK, but other periods can also qualify, such as, looking after children whilst being in receipt of child benefit.

As much of childcare often falls to women, it is often women who might have gaps in their employment and who should take particular interest checking their contributions history Check your National Insurance record - GOV.UK (www.gov.uk) to identify any gaps and to consider their own State Pension forecast at Check your State Pension forecast - GOV.UK (www.gov.uk)

Gaps in contributions can also appear if individuals were:

  • employed but had low earnings
  • unemployed and not claiming benefits
  • self-employed but did not pay contributions because of small profits
  • living or working outside the UK.

If individuals have not contributed enough prior to reaching State Pension age, they may receive much less than they could. Some may wish to make voluntary NI contributions to top up their contribution history, potentially increasing the amount of State Pension they will receive. Specific financial advice is recommended when making that decision as future earnings might close the gap and there are life expectancy considerations. However, each additional qualifying year costs £824 and adds £275 per annum in additional pension. So, those who draw three years of additional pension as a result of their contributions, will be cash positive.

For more information or to discuss your personal circumstance, please contact Simon Warne or your usual Crowe contact.

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Simon Warne
Simon Warne
Partner, Private Clients