Boosting the State Pension
A look at the latest advice for boosting the State Pension.
26 Nov 2024
The State Pension is a key part of retirement planning for many people. Having paid into the system via National Insurance Contributions (NICs) throughout working lives it is only natural that people want to get out all they are entitled to once they reach pension age. Here, we take a look at the latest advice for boosting the State Pension.
The triple lock
Under the triple lock policy, the state pension increased every year by whichever is the highest of inflation, earnings growth or 2.5%. However, earnings growth, which was running at 8%, was dropped to create a double lock.
In October's Autumn Budget, Chancellor Rachel Reeves confirmed a 4.1% increase to the basic and new State Pension, as well as the standard minimum guarantee for Pension Credit, from April 2025.
This means the full new State Pension will rise from £221.20 to £230.25 a week, providing an additional £470 a year, while the full basic State Pension will increase from £169.50 to £176.45 per week, worth an extra £360 annually.
Maximise the State Pension with online payments
People have until 5 April 2025 to maximise their State Pension by making voluntary NICs to fill any gaps in their NICs record between 6 April 2006 and 5 April 2018.
A new digital service enables people to check if they have gaps in their NICs record, calculate if making a payment would increase their state pension, and then make a payment if they wish to do so.
So far, more than 10,000 payments worth £12.5 million have been made through a new digital service to boost people's state pension, HMRC has revealed.
HMRC data shows:
- 51% of taxpayers topped up one year of their NICs record
- the average online payment is £1,193
- the largest weekly State Pension increase is £107.44.
After the 5 April 2025 deadline, people will only be able to make voluntary contributions for the previous six tax years, in line with normal time limits.
Check your pension here.
Dignity and support
Emma Reynolds, Minister for Pensions, said: 'We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement. That's why I urge everyone to check if they could benefit by filling gaps before the deadline passes. Using our online tool means only a few clicks could make a huge difference to your future.'
Missing payments
Some parents who claimed Child Benefit before 2000 are missing out on State Pension payments they are entitled to because of gaps in their NICs records.
HMRC is urging those affected, who are mainly women at or approaching State Pension age, to check for gaps in their National Insurance (NI) record and top up their State Pension for free.
Home Responsibilities Protection (HRP) was applied to the NI records of those who claimed Child Benefit between 1978 and 2000, to protect their State Pension. It reduced the number of qualifying years a person with caring responsibilities needed to receive the full basic State Pension. It was replaced by NI credits in 2010.
However, if someone claimed Child Benefit before May 2000 and did not provide their NI Number on their claim, HRP may not have been applied and their State Pension entitlement could have been affected.
Raising a family
If people are missing HRP from their NI record, it doesn't automatically mean their State Pension calculation is incorrect, but it does increase the possibility, particularly if they spent a number of years away from work to raise a family.
HMRC and the Department for Work and Pensions (DWP) are working to identify those people affected and encourage them to make a claim for HRP so their records can be amended.
People can check their eligibility and make a claim on GOV.UK and takes about 15 minutes to complete. They can also claim by post using form CF411.
If an individual makes a successful claim, HMRC will update their NI record and DWP will recalculate their State Pension entitlement.
Planning ahead
To discuss the best way to plan for retirement, please contact us.
