How to boost your state pension by up to £700 a year

STATE pension payments are worth thousands of pounds a year, so you don’t want to miss out.

The maximum pension amount you’ll get is £179.60 a week – or around £9,339.

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While it’s unlikely to be enough to live off alone, getting the most you can from your state pension can give your finances a valuable boost.

The average amount retirees are getting on the new state pension now is £170.50 for men and £164.74 for women, according to the latest figures.

That means they are missing out on as much as £700 a year.

There are plenty of things you can do to make sure you’re not missing out on this cash once you’ve finished work.

To qualify for the new state pension you need at least ten years’ worth of national insurance contributions, and to get the maximum you need at least 35 qualifying national insurance years.

Check your national insurance record

National insurance contributions are usually taken directly from your wages if you’re employed or via self-assessment for the self-employed.

People often have gaps if they were unemployed, on a low income, or self-employed.

You can check how many years of NI payments you’ve made and see any missing years on the government website.

If you don’t have one already, you’ll need to create a government gateway account online.

You can also request a statement online, over the phone or by post, but writing to: National Insurance contributions and Employers Office, HM Revenue and Customs, BX9 1AN

The closer you get to retirement, the more important it is to check how many years you have.

If you have any gaps that mean you might not hit 35 qualifying years, you can still take action so you don’t miss out on the cash.

If you don’t have enough national insurance contributions to get the full state pension, or even any state pension at all, then you can choose to buy extra credits.

You can do this before state pension age and once you reach it.

Most people will do this by buying what’s known as class 3 national insurance credits to fill gaps in their record at a cost of £15.40 a week for the 2021/22 financial year.

So to get a whole year’s worth, and you’d pay £800.80.

For those with gaps in their record on or after April 6, 2016, you can add 1/35 to your state pension for life.

This may sound like a lot, but it would boost your state pension by over £200 each year.

This means it would take less than four years of getting more from the state pension to recoup the cash you’d have to shell out for contributions in the first place – and you would continue to get this boosted state pension for the rest of your life.

Just bear in mind that you can usually only pay for gaps in your national insurance record from the past six years.

The rules on how much you pay are also slightly different if you’re self-employed and buying class 2 contributions.

You can find out more about making voluntary National insurance contributions from gov.uk.

The rules are complex so it could be worth seeking financial advice or  contacting the Future Pension Centre to find out if you’ll benefit from making extra payments.

Avoid gaps by claiming national insurance credits

National Insurance credits are a way of maintaining your National Insurance record when you are not making National Insurance contributions through work. 

They help to build up qualifying years over time, which you can use to make you eligible for basic state pension and other benefits.

You can get National Insurance credits if the following applies:

• You’re on Jobseeker’s Allowance and not in education or working 16 hours or more a week or you’re unemployed and looking for work, but not on Jobseeker’s Allowance
• You’re ill, disabled or on sick pay
• You’re on maternity, paternity or adoption pay
• You’re a parent who has registered for child benefit for a kid under 12, you want to transfer credits from a spouse or you’re a foster carer
• You’re a carer on carer’s allowance, on Income Support and providing regular and substantial care or you’re caring for one or more sick or disabled person for at least 20 hours a week
• You’re a family member over 16 but under State Pension age and you’re caring for a child under 12 
• You’re on working tax credit or universal credit
• You’re on a training course or jury service
• Your partner is in the armed forces
• You’ve been wrongly imprisoned

You can check the full list of who’s eligible for claiming credits on the government website.

It explains the circumstances where you’ll need to claim and when you’ll get it automatically.

You’ll either need to apply online or have to contact your local Job Centre to receive the credits.

You can check how to apply for each one on the same page.

Beware the child benefit trap

For couples, the lowest earning person could be missing out on National Insurance credits.

This could be happen if a child benefit claim is under the highest earner’s name in the household.

Someone who receives child benefit for children under the age of 12 is treated as if they had paid NI contributions for that week.

It means if the lower earner in the household isn’t the person who made the claim, they’re missing out on NI credits that count toward their state pension.

Meanwhile, anyone earning over £50,000 can’t get child benefit, but parents are still encouraged to register so they don’t miss out on the credits.

The same also goes for grandparents who haven’t yet reached retirement age and care for their grandkids could also be missing out.

One grandmother has said she lost out on £800 a year in state pension payments.

National Insurance Credits can be passed from a parent to grandparent doing childcare, but only if the parent is claiming child benefit themselves first.

The grandmother of two missed out because her daughter wasn’t claiming.

Both parents and grandparents who find out they could have been getting the credits can only backdate claims for National Insurance Credits for three months.

This means they could miss out and lose thousands in state pension payments later on.

If you’re already retired and get a small income through the state pension you could get extra cash.

Around a million pensioners are missing out on thousands of pounds a year and extra freebies on top via pension credit.

How much you get depends on your specific circumstances, including whether you have a partner, if you’re disabled, and whether you have caring responsibilities for young children.

If you’re eligible for pension credit you’ll also be able to get other benefits such as a free TV licence for over-75s or a council tax reduction.

Check out more in our pension credit guide including who’s eligible and how to claim.

The quickest way to see what benefits you may be able to claim is to use one of the three benefit calculators recommended by Gov.uk.

Each one is free to use. They are: 

Before using the tools, make sure you have key financial information to hand, such as bank and savings statements, and information on pensions and existing benefits.

This post first appeared on thesun.co.uk