Martin Lewis has explained how millions of people could be missing out on a £68.90-a-week boost to their retirement income due to insufficient National Insurance (NI) contributions. The founder of MoneySavingExpert.com, speaking on his podcast, addressed a query about a relative approaching their 40s who had never worked, claimed benefits, or built up any NI credits.
The 'Hard Bottom, Soft Top' System
Lewis described the state pension system as having a “hard bottom and a soft top.” This means there is a strict minimum threshold for receiving any pension at all, but more flexibility around qualifying for the full amount. He explained that NI contributions are credits accrued through employment or certain benefits, with parents and carers receiving credits to protect their pension record. “I think of it like a token: For each year that you work, you get a National Insurance credit - a token that goes into the piggy bank,” he said.
35-Year Assumption Misunderstood
Many people assume they need exactly 35 qualifying years to receive the full new state pension, but Lewis says the situation is more complicated. “For some people it’s more, for some people it’s less,” he noted, adding: “Just because you’ve got your full state pension entitlement, doesn’t mean you stop paying National Insurance if you’re working, and you’re under state pension age.” The full new state pension is currently worth £241.30 a week (£12,550 a year).
Minimum 10 Years Required
Lewis pointed out a firm minimum threshold: “The bottom is a hard bottom, because to get any state pension you need 10 years of National Insurance credits.” Those with gaps in their NI record should check if paying voluntary contributions could take them up to the minimum 10 years, which under current rules would then see them receive around £68.90 a week (£3,582.80 a year) in state pension payments. Someone with nine qualifying years could buy one extra year to unlock that rate instead of receiving nothing.
Voluntary Contributions and Pension Credit
People can usually pay voluntary contributions to fill gaps of up to six previous tax years, although whether this is good value depends on individual circumstances. Lewis also reminded those with little or no state pension entitlement that Pension Credit could provide valuable support. “The obvious thing for someone with no or low income is Pension Credit,” he said. “Pension Credit is effectively a top-up to any or no state pension that you get, to give you a minimum income.”
Extra Benefits from Pension Credit
As well as boosting weekly income, Pension Credit can open up access to extra help such as council tax support, housing assistance, help with NHS costs, and free TV licences for eligible households aged 75 and over.
