Pensions - Articles - 150 thousand pensioners on State Pension under GBP100 a week

 Department for Work and Pensions (DWP) data accessed by Royal London reveals the number of people who are missing out on the full State Pension because they have gaps in their National Insurance record or were ‘contracted out’ and so paid lower National Insurance.

 To get the full new State Pension, people reaching State Pension age from April 6th 2016, need to have paid, or been credited with, 35 years of full National Insurance contributions (NICs). Those with fewer than 35 so called ‘qualifying’ years get a proportionately smaller State Pension.

 According to figures provided by the Department for Work and Pensions (DWP) for 2023, only around half (1,737,342) of the 3,407,567 people receiving the new State Pension got the full weekly amount of £203.85 last year.

 Worryingly, there were 149,317 pensioners who had reached State Pension age from April 2016 who were receiving a State Pension of less than £100 a week – or £5,200 a year. Among that number were 17,546 pensioners receiving a State Pension of less than £20 a week – or £1,040 a year. The data also reveals that 5,677 people were receiving less than £10 a week.

 While people may have other sources of income after they’ve retired, such as a workplace or private pension, our State Pension research** showed that 1 in 5 people aged 66 or over (therefore entitled to receive their State Pension) were living on the State Pension alone.

 Pensioners on a low income may be entitled to claim Pension Credit, which can be worth approximately £3,900 a year. However, it’s estimated that 800,000 people over State Pension age are not currently claiming this benefit, which also entitles recipients to other benefits, including help with NHS dental treatment, prescriptions and housing costs.

 Sarah Pennells, consumer finance specialist at Royal London said: “We often talk about the full State Pension amount, but these figures show how many pensioners are getting only a fraction of that. One of the main reasons why people miss out on the full State Pension is because they have gaps in their National Insurance record, but they may not realise this until it’s too late to do anything about it. You may have National Insurance gaps because, for example, you were working but had low earnings, were unemployed but didn’t claim benefits, were a high earner with young children who didn’t register for child benefit, or because you were working abroad.

 “The good news is that, even if you have gaps in your National Insurance record going back over a decade or more, it may still be possible to top up your National Insurance contributions and increase the amount of State Pension you’re entitled to. Under the new State Pension system, you don’t get any State Pension at all if you have fewer than ten years’ National Insurance, so it’s important to check your National Insurance contribution record.”

 The DWP allows people to boost their retirement income by making extra National Insurance contributions to make up for missing years. Usually, an individual can only fill in gaps from the previous six tax years, but, until April 2025, those who are entitled to the new State Pension may be able to fill in gaps going all the way back to April 2006. This is the equivalent of 18 years of voluntary NICs in total, between the period April 2006 to 5 April 2024.

 It costs around £907.40 to fill in a missing year for 2024-25 but could be less for earlier years. Paying an extra year in the current tax year’s rates could boost your state pension by almost £329 a year at today’s rates. That would mean an additional £6,573 over a 20-year retirement.

 Sarah Pennells continued: “You may be entitled to free National Insurance credits if you’re caring for a child under the age of 12 by registering for Child Benefit, or if you’re caring for someone else who’s getting certain benefits. In that case, you may be able to top up your National Insurance record for free. But for those who can’t, it’s important not to miss this deadline of 5 April 2025. That’s the date by which you must have paid voluntary National Insurance contributions to make up for gaps between tax years April 2006 and April 2018. After that, you’ll only be able to go back six years and fill in any gaps.

 “This deadline has already been extended twice, so this may be the last chance. The clock is ticking.”