Are you fully entitled to UK state pension ?

To receive the full pension your national insurance record must include 35 “qualifying years”.  A qualifying year is one in which you were either:

1. working and made National Insurance contributions*, or

2. getting National Insurance credits e.g. if you were unemployed, ill or a parent or carer, or

3.       paying voluntary National Insurance contributions.

If you are working it is not always necessary to pay contributions in order to qualify for a pension. For directors and employees, if your earnings exceed the lower earnings threshold of £533 per month then they do qualify for state pension notwithstanding that no employee contributions are payable on earnings of less than £1,048 per month. (And, no employer contributions are payable on earnings of less than £758 per month).  Similarly, for the self-employed, those with profits between £6,725 and £12,570 will qualify for state pension without paying contributions.

If you are in doubt as to whether you will have sufficient qualifying years we recommend that you should check before you reach state pension age. This is fairly simple by opening an online personal tax account. Please visit:

https://www.gov.uk/personal-tax-account

Once the account has been set up you will be able to review your record for state pension purposes and the amount of your expected pension. If you expect to have insufficient qualifying years for the full pension, you may be able to boost the number of qualifying years by one of the following alternatives:

For the self-employed, it is no longer required that you should pay class 2 contributions. However, if your business profits are less than £6,725 per annum then you would not otherwise qualify for state pension. In order to so qualify, you can however opt to pay class 2 contributions which are at a set rate of £3.45 per week. You can normally pay

contributions for the last 6 years.

For those who are not self-employed, you may pay class 3 voluntary contributions. These are set at a rate of £17.45 per week; class 2 contributions are therefore always the preferred alternative for the self employed as they are far less expensive.

A useful link towards paying Class 2 is found at

https://www.gov.uk/pay-class-2-national-insurance

For those who reach state pension age after 5th April 2016, state pension is paid at a flat rate. The weekly rate of state pension for the year commencing 6th April 2024 is £221.20 (the 2023-24 figure was £203.85).

Whilst the level of state pension entitlement is set as weekly figure, most people elect to receive their pension at 4 weekly intervals. You would therefore receive 13 payments each year. However, for taxation purposes it is your entitlement to a weekly sum that will be included in your taxable income. Your annual taxable income will usually include 52 weeks of entitlement, and may occasionally include 53 weeks when there are 53 payment days falling within the tax year (the due date for payment varies according to the last two digits of your national insurance number).   

If you had paid National Insurance contributions before 6th April 2016 you may qualify for an increased pension – the increase is known as a protected payment. It is calculated based on your contribution record and is intended to ensure that you are not worse of under the regime introduced in 2016 than you would have been under the previous system.