State pension

Learn > Pensions > State Pension

What actually is it?

The State Pension is a guaranteed income from the Government which you receive when you reach state pension age. This age is changing constantly, but you can find out when you will reach this age by using the state pension age calculator from gov.uk here.

This is basically so that people don’t work until they are 100, although you can still continue to work past state pension age and you will receive this income as well. You also don’t pay any National Insurance if you work past your state pension age!

How do I get it?

To be eligible for the New State Pension you must be a man born after 6 April 1951 or a woman born after 6 April 1953 AND you need to have a minimum of 10 qualifying years on your National Insurance record. This means that you have been working and paying National Insurance for at least 10 full years during your life.

However, to receive the full state pension (currently £175.20 a week) you will need 35 years on your National Insurance record. You can get National Insurance credits for years where you are claiming:

  • Child benefit for a child under 12

  • Jobseeker’s allowance

  • Carer’s allowance

Alternatively, you can make voluntary contributions towards any gaps in your record. Meaning you would pay HMRC in order to increase the amount of state pension you can receive. It is worth discussing this with a financial adviser if you have NI record gaps.

Only £175.20?

Yes, at the moment the new state pension is paying £175.20 per week at most, which isn’t a lot. However, this is why it is important to be paying into a workplace pension as well as discussed here.

This amount increases each year though, it will increase by whichever is the highest of:

  • 2.5%

  • CPI Increases

  • Average growth of UK wages in the year

National Insurance

Now you can see why you are paying National Insurance. It all contributes towards state pension costs, if you didn’t pay N.I you wouldn’t receive a state pension, in short.

However, it’s even smarter than that. When you receive your N.I Number at 15 the Government have already decided what day you will be getting your pension. The last 2 digits of your N.I Number indicate this:

  • 00 to 19 - Monday

  • 20 to 39 - Tuesday

  • 40 to 59 - Wednesday

  • 60 to 79 - Thursday

  • 80 to 99 - Friday

Should you have any questions regarding National Insurance records or the new state pension please drop us an email and we can have a conversation with you!

hello@thebankengine.com