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Have you checked your State Pension forecast recently?

Older couple chatting over breakfast in cafe

The State Pension is an important part of planning and budgeting for your retirement, but have you checked your forecast recently?

On 6 April 2016 the new State Pension was introduced for those reaching State Pension age on or after this date. It’s a flat-rate amount subject to annual increases. When you’ll be eligible to receive it will depend on when you were born and the amount you receive will depend on National Insurance (NI) contributions.

Many people will need about 35 qualifying years of NI contributions. However, those who started their NI record before 2016 (which will apply mainly to people currently aged 45 to 70) how many qualifying years you need is based on your age and NI record up to now – which could mean you need more than 40 NI years to receive the full State Pension when you reach State Pension retirement age.

You can check your State Pension forecast which will tell you how much of the State Pension you’re on target to get. If the amount is lower than the current full amount of £185.15 per week then you can look for gaps in your NIrecord.

If you have gaps in your NI record you can check if you are eligible for NI credits. If you’ve been on statutory sick pay or on maternity, paternity or adoption pay or other benefits and not earning enough for a qualifying year you may be able to apply for NI credits. You can find out more on the governments national insurance credits page.

Until 5 April 2023, you can buy national insurance (NI) years to fill gaps going back to 2006. That means you currently have the option to buy up to 16 qualifying years. After this point, the number of extra years you can purchase drops down to the last six tax years, so checking now is key, especially if you have less than 4 NI years as you normally need at least 10 to get some of the State Pension.

What do I need to think about?

  • How old you are: The younger you are, the more time you’ll have to naturally make up these NI contributions through working.
  • Whether you’re entitled to any NI Credits: if you’ve been on maternity, paternity or adoption pay, or not earning enough you could be eligible for NI credits.
  • Whether you’d be entitled to pension credit when you retire: This will depend on a number of factors, including what you expect your income will be from work or other pensions when you reach state pension age. You can find out more at the government’s pension credit information page.
  • If you can afford to purchase the additional years: The Future pension centre will give you a quote for how much these additional years will cost.

You can find out more information by contacting the governments Future Pension Centre.

This can be a complex area so you may want to seek independent financial advice, you can find an adviser through Advisers may charge for their services.

This could also be a good time to review your retirement savings and see if they are on track. You can explore your options for taking your money and experiment with the income you could achieve using our Retirement Planner which you can access through your online account.