State pension

Amended pensions bill boosts entitlements

The government has amended its pensions bill to make it easier for people to boost the amount of state pension they are entitled to receive. To claim the full state pension, currently £90.70 a week, you must have built up a certain number of qualifying years during your working life. You can make up any years you may have missed, for example through child care or ill health, by making a voluntary National Insurance contribution, but the current rules say you can only make up the most recent six years of missing payments.

The government now plans to allow you to make up an additional six years from any time in your career.

However, the rule will apply only to those who reach state pension age before 5 April 2015 and who have 20 qualifying years under their belts.

The state pension age is 65 for men and 60 for women who were born on or before 5 April 1950. Between 2010 and 2020 the retirement age for women will rise to 65 too. Between 2024 and 2046 it will rise to 68 for everyone.

A qualifying year is the year in which you have earned enough to make National Insurance contributions. In the 2008/09 tax year this is £4,680 or more for employees, and £4,825 or more for the self-employed. To get any state pension at all you must have at least ten qualifying years as a man and nine as a woman.

To get a full state pension the number of years you need depends on your sex and when you plan to retire. If you reach state pension age before 5April 2010 and you are a man, you will need 44 qualifying years to get the full state pension; if you are a woman you will need 39 years. After 5 April 2010 everyone will need to have accumulated 30 qualifying years.

Currently you can reduce the number of years you need to qualify to as few as 20 through home responsibilities protection – this is available if you are receiving child benefit or caring for someone sick or disabled. After 2010 this is set to be replaced by NI credits.

To determine if you have to make up your qualifying years, you will need to add up how many years you have worked and paid National Insurance, and how many more you are set to do before you reach the state retirement age, and you can see if you have enough qualifying years.

If you have any doubts as to whether you have paid NI contributions for every year you have worked, you can call the National Insurance enquiry helpline on 0845 915 5996 to check your record. The Pension Service can also provide you with a state pension forecast. To make up contributions at the moment it is £420 for each qualifying year, although this will be increased to offset the cost of the change.