State pension: Expert discusses possible ‘significant increase’
State pension income can make up a significant part of a person’s income during retirement. Currently, the full new state pension is £175.20 per week – and it’s set to rise by 2.5 percent in April 2021.
That said, the actual amount a person gets depends on their National Insurance record.
Furthermore, there may be additional reasons why a person gets a higher or lower amount than this rate.
Usually, a person will need to have 10 qualifying years on their National Insurance record to get any state pension.
Those who do not have a National Insurance record before April 6, 2016 will need 35 qualifying years to get the full new state pension.
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Those contracted out before this date may get less than the full new state pension, it’s worth noting.
“You may get more than the new full State Pension if you would have had over a certain amount of Additional State Pension under the old rules,” adds the government.
Meanwhile, to get the full basic state pension, a person needs to have a total of 30 qualifying years of National Insurance contributions or credits, states the government.
For some, there may be ways to increase their state pension, something which is a contributory benefit.
It’s something which Kay Ingram, Director of Public Policy at national financial planning group LEBC, has previously shared some insight on.
“You can request a forecast from https://www.gov.uk/check-state-pension or call 0800 731 0175 to establish how much you may receive,” she said.
“If it is less than £175.20 per week under the new state pension or £134 for a pension starting before April 6, 2016, you may be able to increase it,” she said, adding there are a number of ways one may be able to do this.
Parents or guardians can claim Child Benefit, and those who do this for a child who is under the age of 12 (or 17 if the child is registered disabled) can automatically get a National Insurance credit, which contributes to state pension entitlement.
“Parents not paying NI contributions through employment or self-employment may claim credits, which are automatically provided when claiming Child Benefit,” Ms Ingram said.
“To ensure the NI credit isn’t wasted it is essential that the adult who is not paying NI through employment or self-employment claims the Child Benefit.”
She added that households which have opted to waive Child Benefit due to the High-Income Child Benefit tax Charge (HICBC) can still get the credit by applying for Child Benefit then stating their preference to waive the payment.
There is also a way for relatives – such as grandparents for instance – to boost state pension entitlement via National Insurance credits.
This is via the Specified Adult Childcare Credit.
It’s something which can be claimed by anyone who is under state pension age and is voluntarily caring for family members under the age of 12 while the parents work.
“For those eligible, the credits can be backdated up to 2011 and could be worth extra State Pension of as much as £2,340 per annum,” said the chartered financial planner.
The rules regarding the Specified Adult Childcare credits have temporarily changed amid the coronavirus pandemic.
This is because normal caring arrangements may have been affected due to the COVID-19 crisis.
It means that currently, it’s possible to claim the National Insurance credits even if care is being provided via a virtual medium.
“If you have provided care in a different way, for example over the telephone or video, you can still apply for NI credits for the financial years 2019 to 2020 and 2020 to 2021,” explains the government.
Eligibility rules do apply, and this includes if the person is a grandparent, or other family member who cares for a child under the age of 12.
Furthermore, they need to be over the age of 16 and under state pension age when the care is being provided.
They must also be “ordinarily resident in the United Kingdom, meaning England, Scotland, Wales and Northern Ireland, but not the Channel Islands or the Isle of Man”.
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