Thousands of people could miss out on £275 a YEAR in retirement – how to avoid it

THOUSANDS of people could be missing out on hundreds of pounds a year in retirement.

State Pension payments are made once you turn 66 – if you qualify.

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You’ll need to have 10 years of National Insurance contributions (NICs) to get any money at all.

And to get the maximum amount worth £185.15 under the new pension system, you’ll need 35 years of recorded NICs.

But many may be missing out on these “qualifying” years – and it could mean losing out on £275 a year.

James Andrews, personal finance expert at money.co.uk, told the Express: “Retiring with a single missing national insurance credit costs you a bit over £275 a year, every year of your life.

“That means in the run up to state pension age it’s vital you make sure you claim every qualifying year you can.”

Gaps in contributions, for example when you’re not working and looking after children, can be made up by claiming credits instead.

Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.

Missing out one year can cost you 1/35 of your full pension.

Based on current State Pension rates they could be worth as much as £5,501 over a 20 year retirement.

As the amount of state pension rises each year, it becomes worth more over time

Those thought most likely to be affected are carers, couples and higher earners,

Carers who get the Carer’s Allowance benefit automatically get National Insurance Credits.

But for those who don’t get it but still have caring responsibilities, they need to claim Carers Credit to fill the National Insurance gaps.

For couples, the lowest earning person could be missing out on National Insurance credits if a child benefit claim is under the highest earner’s name in their 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.

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 good news is that you can take action now so you don’t miss out.

What are National Insurance credits?

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

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 need 35 years of NICs to get the maximum state pension under new rules, which is curranty worth £185.15 a week, and a minimum of 10 years to get anything at all.

Who is eligible for National Insurance Credits?

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

How can I check if I’ve missed any National Insurance contributiuons?

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.

How can I claim National Insurance credits for gaps?

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.

If you are not entitled to NI credits for a year, you can also pay to fill in the gaps by making voluntary contributions,

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 £15.85 a week for the 2022/23 financial year.

So to get a whole year’s worth, and you’d pay £824.20.

This may sound like a lot, but it could 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.

This post first appeared on thesun.co.uk