In the United Kingdom, you are eligible for a state pension if you have completed 10 qualifying years on your National Insurance (NI) record. Your pension amount depends on how much NI contributions you have paid in.
The state pension is typically paid out every four weeks into either a personal or workplace pension, as well as into the means-tested benefit known as Pension Credit which serves to supplement your income.
Age at which you can claim
In the United Kingdom, your state pension is determined by how long you’ve paid National Insurance contributions and earned. These are known as your ‘qualifying years’.
If you don’t have enough ‘qualifying years’, voluntary contributions can be made to make up any shortfalls and boost your State Pension benefits.
Around two months before reaching State Pension age, you should receive a letter with instructions on how to claim. You can do this online or over the phone; however, remember that you have up until four months left until the start of your claim.
At present, both men and women are eligible for the State Pension age of 66; however, this will gradually rise to 67 by 2028 with predictions that it may reach 68 by the late 2030s.
How much you’ll get
Your state pension benefits will depend on several factors, such as how long you’ve worked and whether or not you live alone or in a cohabiting relationship. Each has an effect on how much money is given to you each month.
Your state pension amount will depend on how many National Insurance contributions you made or were credited with. In order to receive the basic State Pension, you must have paid 10 years of qualifying NI contributions; with 35 years qualifying NI contributions, the full State Pension would apply.
Your benefit amount will also be determined by the average of your highest 60 months’ income, known as “average final compensation (AFC).” DRS uses this data to calculate your pension benefit amount.
How often you’ll get it
When calculating how frequently you will receive your state pension, there are a number of factors to take into account. One important factor is the total amount of contributions made to PRSI over your lifetime.
Calculating your State Pension depends on your yearly average of paid PRSI or National Insurance credits. The higher this number is, the larger the payout you’ll receive upon retirement.
Your National Insurance record consists of all paid and credited contributions from employment, self-employment activity, as well as any voluntary contributions you choose to make in order to fill in any gaps on the record.
State Pension payments are made every four weeks into an account of your choice, although you will typically only receive payment for the past four weeks (not for the upcoming ones). There may be special rules in place if you live abroad.
Buying a state pension
In the United Kingdom, purchasing a state pension is relatively straightforward. All that needs to be done is reach state pension age and make your claim.
Your amount will depend on your National Insurance record, including contributions paid when employed and credits credited when not. It could also include voluntary payments made to cover gaps in earnings or credits when not earning them.
It is worth remembering that you may be eligible for extra State Pension benefits if you defer claiming for a certain period of time, such as one or two years. This means the amount received upon claiming will be higher than if you had claimed earlier.
Each April, the basic state pension is adjusted according to the consumer price index (CPI) for the previous September and three-month average earnings growth – this process is known as “triple lock”.