Be better off for life

Be better off for life

By Paul Lewis

People who reach state pension age in the next few years may get less than the full amount, even if they have paid the 35 years of National Insurance contributions that is often said to be enough for a full pension of £155.65 a week – £8,093 a year. This could affect more than a million new pensioners.

The main reason for a reduction is that individuals will have paid into a good pension scheme at work at some time since 1978. They will get a reduced pension to take account of the fact they paid lower National Insurance contributions and now receive another pension of their own.

This rule affects people who worked in the public sector – including the NHS, teaching, police, fire service, local authorities, civil service, or armed forces. It also includes some in the private sector who were “contracted out” of part of the state pension into a good company pension or into a personal pension scheme.

The reduction can be considerable – they may get as little as £119.30 a week, a loss of £36. But new rules this year allow many people to close the gap between the reduced pension and the full amount.

Every year that those affected pay contributions from 2016/17 will boost the state pension they get by £231 a year. A few years’ contributions could mean they get the full new state pension of £155.65 a week. These contributions will be paid automatically if they work and earn above £112 a week. They will be credited if they get jobseeker’s allowance or certain other benefits. Otherwise they can pay them voluntarily. This would cost £733 for each year paid, which will be repaid very quickly by the £231 a year extra pension gained.

No contributions can be paid in the tax year they reach state pension age or later. So those already close to state pension age will be able to get less of a boost.

 A new guide to boosting your state pension in this and several other ways has just been published by the mutual insurance company Royal London. Written by former Pensions Minister Steve Webb, it explains the complex rules clearly. It could make you better off for life.

For more information, go to Topping Up Your State Pension at or (search”Target 155”).

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