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State pension: should YOU top up?

abacusDo you know when you’ll get your state pension? And how much you’ll get? I know that I will get the full basic State Pension – currently £164.35 a week – on my 67th birthday. To get the full basic state pension you need 35 years of National Insurance contributions. I’ve been working since I was 21 so I’ve got a few years to go yet until I’m at the 35 years needed: but only a few.

I did think that I got NI credits towards my state pension because I get Child Benefit. But I've just found out (thanks for pointing this out twitter!) that this only applied until junior was 12. So it's just as well I'm still working so I should make the 35 years needed for a full state pension easily enough. Watch out If you aren’t working but don’t get Child Benefit because your partner earns more than £60,000. Even if won’t get any Child Benefit, then you must still register for it – otherwise you won’t get the NI credits needed to get a full state pension. See Jane’s blog on signing up for child benefit.

But what if you’ve still got gaps and won’t make the 35 years needed? This will be the case for lots of women who have taken breaks from work – maybe to look after elderly relatives or to study. You can pay for extra years which will allow you to get a full pension if you don’t have 35 years’ worth of contributions. According to Royal London, if you’re thinking about doing this then you need to do it before 6 April. While you can buy extra years after this date, if you do so before then you’ll pay less. If you’d missed getting any NI contributions for all of the six years 2010-16 then it would cost you a not-inconsiderable £4,131.50 to buy those lost years and get a full state pension. But from 6 April it will cost you £4,680 for the same amount: £548.50 more.

However, it’s important not to rush in: sometimes, thanks to the complicated rules, it’s not worthwhile topping up. Make sure you check whether it’s a good idea at the government’s Future Pensions Centre. And Royal London also has a guide to topping up your state pension.
See our SMM guides (and video) on pensions.

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Monday, 22 April 2019