There are 7 ways to increase State pension entitlement. Some for those already over State retirement age and others for those below age 66. Many of them will cost nothing. Here we provide a summary and links to further information.
The State pension is a contributory benefit. Individual entitlement is based on national insurance contributions (NI), these are usually paid via PAYE for employees and the self-employed pay class 2 NI contributions. To find out how much state pension you may receive a forecast can be requested from https://www.gov.uk/check-state-pension, telephone 0800 731 0175. If it is less than £175.20 per week under the new State pension or £134 for a pension starting before 6 April 2016, you may be able to increase it in one of the following ways:-
- Claim child benefit. Parents not paying national insurance through employment or self-employment may claim credits which are automatically provided when claiming child benefit. To ensure that the NI credit is not wasted it is essential that the adult who is not paying NI through employment or self- employment claims the child benefit. Credits continue until the youngest child is 12.
Parents who have waived the benefit due to the High-Income Child Benefit charge can also claim the NI credit by applying for child benefit but then waiving payment of it.
- Specified Adult Childcare Credit can be claimed by anyone under State pension age who is voluntarily caring for family members under 12, while the parents work. The credits can be backdated up to 2011 if eligible, so could be worth an extra state pension of up to £2,340 pre annum.
- Carer’s Allowance and Carer’s Credit. If in receipt of Carer’s Allowance a credit for NI contributions will automatically be available. Each year’s credit currently provides £260 per annum of State pension. Telephone 0800 731 0297- https://www.gov.uk/carers-allowance
If ineligible for Carer’s Allowance you may still claim Carer’s Credits worth a NI credit for each year if you care for an adult for 20 hours per week or more and whose care needs meet the eligibility criteria.
- Delay starting the State pension. While state pension is payable from age 66 and earlier for those who qualified before this year, payment can be delayed, and the annual pension will be increased. This could be worthwhile if still working, paying tax at higher rates and with an expectation of a long lifespan. Different rules apply depending upon when entitlement started, with those born before 6 April 1951 (men) and 1953 (women) offered a better deal.
- Pause receiving the State pension. Those who have already started to receive State pension may pause payment of it. This can only be done once and could be worthwhile if the income it provides is surplus to needs, if the individual’s tax liability will be higher for a period and there is an expectation of a long lifespan or, for older couples, a spouse who may benefit from the lump sum payable on death, where the pension started before 6 April 2016.
- Pay Voluntary National Insurance Missed NI contributions can be made up by paying class 3 contributions. The cost is £795.60 for each year’s credit and will buy up to £260 per year of extra pension. Care is needed when deciding how many years and which ones to pay for or it could be money wasted. In 2016 the state pension changed and only 30 years contributions count towards pre 2016 benefits. From 2016 35 years are needed, so deciding which years to allocate the top up to is crucial. Unfortunately, the online tool on the DWP website does not distinguish between these two sets of rules, so before paying it is worth checking by calling the DWP 0800 731 0175 or taking financial advice.
- Claim on the NI record of a spouse, ex- spouse or deceased spouse. Married women entitled to claim their State pension before 6 April 2016 may also be entitled to an uplift in pension when their spouse turns 65. This applies where the woman’s pension is less than 60% of the basic state pension paid to her husband (around £80.45 per week). Widows and divorcees may also be eligible for this increase but must actively apply for it, including any arrears which may be due.
Public Policy Director
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