State Pensions are a fundamental source of income for many retirees. With the new full rate, these payments may amount to £230.25 per week and can be combined with other savings to maintain a basic standard of living after reaching the State Pension age.
However, it’s crucial to acknowledge that not everyone will receive this full amount. If you are receiving less than £230.25 per week, you might want to boost your qualifying National Insurance years or find other ways to increase income post-retirement.
The UK government has outlined several ways of doing this on its website – and we’ve summarised some of the key points below.
1. Adding to your National Insurance record
National Insurance is a social security contribution made by employers, employees, and the self-employed to the government. The funds are used solely for social security benefits like the State Pension, while a portion is also allocated to the NHS.
While the payment is usually compulsory for workers, there are certain circumstances in which a person may not pay National Insurance. This may result in gaps in a National Insurance record, reducing the total State Pension amount.
Typically, you need 35 qualifying years of contributions to receive a full State Pension. Situations that could lead to gaps in your National Insurance record include:
- Employed but had low earnings
- Unemployed and were not claiming benefits
- Getting National Insurance credits for less than a full tax year
- Self-employed but did not pay contributions because of small profits
- Living or working outside the UK
However, you might be able to add more qualifying years by:
2. Deferring your State Pension
Government advice highlights just how much you can increase your State Pension income by simply postponing claiming it. For every year of delay, weekly payments could bump up by ‘ju st under 5.8 per cent‘.
“Your State Pension will increase every week you delay (defer) claiming it, as long as you defer for at least nine weeks,” the government explains. Even still, it adds: “You cannot build up this extra State Pension if you get certain benefits. Deferring can also affect how much you can get in benefits.”
Besides this, it’s worth acknowledging that you can also keep working after State Pension age to boost income. In these situations, you’ll typically stop paying National Insurance.
3. Pension Credit
Pension Credit is a benefit issued by the Department for Work and Pensions (DWP) designed to help with living costs among people over State Pension age on a low income.
It is available in two types: Guarantee Credit and Savings Credit. Guarantee Credit increases your weekly income to a minimum level, while Savings Credit provides additional funds if you have savings or an income above the basic State Pension.
Age UK highlights that:
- Guarantee Credit brings income up to £227.10 if you are single, or £346.60 if you are a couple
- Savings Credit is worth up to £17.30 extra per week if you are single, or £19.36 extra per week if you are a couple
For more information on eligibility, head to GOV.UK.