State pension: Expert discusses possible 'significant increase'
State pension payments will vary based on how many years of National Insurance contributions claimants have. In order to receive any amount in retirement, at least 10 years of contributions will be needed, with 35 years needed for full payments.
If 35 years of contributions have been collected, a state pension claimant will get £175.20 per week.
From April 2021, this full amount will increase to £179.60.
National Insurance is usually built up throughout a person’s working life and a “qualifying year” will be generated if:
- a person is employed and is earning over £183 a week from one employer
- a person is self-employed and is paying National Insurance contributions
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If a person is not earning a minimum of £183 a week, they may not pay any National Insurance.
Those who are not working are unlikely to build up contributions but National Insurance credits can be generated instead.
These can be received when a person is not paying National Insurance due to claiming benefits, being ill or unemployed.
Credits can help to fill gaps in a National Insurance record to ensure a person still qualifies for a state pension.
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For example, a person may get National Insurance credits if they:
- claim child benefit for a child under 12
- get jobseeker’s allowance or employment and support allowance
- get carer’s allowance
- are on a training course or jury service
It should be noted that even when a person has built up enough National Insurance contributions, they will not receive a state pension automatically.
State pensions are not paid automatically, they will need to be claimed.
They can be claimed within four months of reaching state pension age and this can be done online, over the phone or through the post.
Should a state pension not be claimed, it will automatically be deferred.
Where a state pension is deferred for at least nine weeks, the payments will be increased.
A state pension will increase by the equivalent of one percent for every nine weeks of deferment.
This equates to just under 5.8 percent for every 52 weeks.
Additionally, state pensions are guaranteed to increase every year under triple lock rules which ensure payments rise by the highest of 2,5 percent, average earnings or inflation.
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