NI credits, voluntary contributions, deferral: 4 ways to max your State Pension

NI credits, voluntary contributions, deferral: 4 ways to max your State Pension

These clever tactics can help you get the highest possible State Pension.

John Fitzsimons

Investing and pensions

John Fitzsimons
Updated on 15 December 2023

The State Pension is a crucial aspect of retirement planning for most of us.

While nobody would enjoy a comfortable time if their only income was the State Pension, the payments are nonetheless a crucial top up to any money saved in personal pensions.

However, the State Pension system is a confusing one, and so it’s easy for savers to end up with less than they could be in the form of their pension payments.

Here are some steps to follow to ensure you get the maximum possible State Pension.

Claim National Insurance credits

Perhaps the biggest factor in determining the size of your eventual State Pension is your National Insurance record.

In order to get the full new State Pension, you need to have 35 years of qualifying National Insurance contributions. In fact, you need 10 years of contributions to get anything at all.

There may be reasons for having some gaps in your National Insurance record.

For example, you may have taken some time to raise your children, or to care for loved ones, or simply been unable to find work.

However, it is possible to get credits from the Government which essentially fill in those gaps.

You can check out the various types of National Insurance credits available on the Government website.

One thing to bear in mind is that while some credits are paid automatically, others have to be manually claimed.

For example, if you are a parent receiving Child Benefit then you get it automatically, though if you’re a grandparent or family member caring for a child under 12 then you will need to manually apply.

Fill in your National Insurance gaps

Even if you are not eligible for National Insurance credits, you may be able to fill those gaps by manually making National Insurance contributions.

These voluntary contributions effectively allow you to clear those missing years, and ensure that when you reach State Pension age you can enjoy the largest possible payments.

Ordinarily you can only fill in missing years which have fallen within the past six years. However, there is an ongoing scheme which allows people to fill in gaps dating back to April 2006. 

This scheme had been due to conclude this year, but the Government has elected to extend it until April 2025.

As Canada Life points out, the cost of filling in a single year is around £907.40, but will boost the size of your pension payments by around £303 a year, so as long as you live for three years after you start receiving your State Pension it will have been worth it.

However, there will be occasions when these voluntary contributions aren’t worth making.

Be sure to read our guide on voluntary National Insurance contributions.

Defer receiving your State Pension

While you have to hit the State Pension age before you can start receiving the payment, there is no actual requirement that you begin at that point.

Indeed, you have to actively claim the pension before it starts getting paid ‒ it’s not paid automatically.

One way to boost the amount you receive is to defer the payment of the State Pension.

It may be that you’re still working and getting by fine on your regular salary, or you are getting enough from your personal pension savings so that you don’t need the State Pension on top.

Doing so will increase the size of the State Pension payments when they do start being paid ‒ you get 1% for every nine weeks you defer.

Of course it’s crucial to bear in mind that there is a balance to be found here ‒ there’s no point deferring the pension when you need it, or to the point that you are unlikely to enjoy it for very long before passing away.

Check out our explanation of the dos and don’ts of deferring your State Pension.

Money and calculator (Image: lovemoney - Shutterstock)

Get the boosts you’re entitled to

This last one is for people who have already hit retirement age, and particularly women. Recent years have seen a scandal emerge, with married women ‒ including those who have divorced or been widowed ‒ missing out on the right pension.

Essentially, these women are entitled to a State Pension based on their contribution history of their spouse. However, in thousands of cases this hasn’t happened, leaving these women potentially significantly out of pocket.

As a result, it’s a really important step for any woman who retired before 2016 to check that they are getting the right amount from their State Pension.

For more on the underpayment scandal, and what you should do, check out our guide.

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