Maximising your UK State Pension

The UK State pension has totally changed over the past few years, and as of April this year the calculation is entirely different.

Going back a few years, Women got their state pension at 60, men at 65. If you a woman born pre-1950, it was also likely that your pension could be calculated on your husband’s National Insurance contributions. (sometimes known as paying the small stamp) Then in 2010, they announced that the pension age for both men and women was moving to 66 from 2020. In addition they changed the eligibility rules. Gee thanks!

So, if you are UK based, or have worked at any stage in the UK (minimum 10 years), you should review whether you are due some state pension, and how much it is likely to be. You can get an estimate here. If you don’t already have a Government Gateway ID, then you should register here. It really simplifies what information you can get online. So far this morning, I have been able to check my tax position, see my National Insurance Record, and obtain an estimate of my state pension.

To get the maximum UK State pension of £155 pw, you need to have paid 35 years of National Insurance contributions, or have credits (not working because of young children, unemployed, long term sick etc) However, as I have personally discovered, it is not enough to have 35 years contributions, (I have 38), there was a category known as ‘contracted out’. In this case you paid less NI, your state pension is reduced, but your workplace pension should compensate you for that. You can check your NI record here

Hence my state pension estimate is £116pw due to ‘contracting out’. While my workplace pension is reasonable, the advantage of the state pension is it is index-linked, guaranteed etc.  So I have decided to pay some money now, to increase my pension.

I contacted the National Insurance helpline. You need your National Insurance Number. They were really helpful. We worked out that if I paid Class 3 NI contributions from when I stopped work in 2011 until now, I would be able to increase my pension by £4pw for each NI year I repaid. The total I had to spend was £2,600 (which works out at 5 years, hence future pension increase £20pw). So I now need to live 3 years after I am 66, to make that worthwhile.

I made the payment on 1st September, however I have just found out that my records have not yet been updated. I will make a phone call on Monday to see why not. Watch this space….

If all is correct, my future pension should have gone from £116 to £136pw approx….

Update: 18th October. I checked online, the figures hadn’t been updated. So I rang the helpline. After 10 minutes on hold, I eventually got through to a very helpful person who identified, that

  • yes the money had been received – thank goodness. I would hate to think that £2650.85 had disappeared into the ether
  • the bad news was that the money had not yet been ‘allocated’ to the various years

So, the lady I spoke to has referred this to the Allocation Team, who should sort this out, and then write to me to confirm. Watch this space!

Update: 5th November. Just checked online – no change – this is obviously not a fast service…

Update 12th November : Received a letter today saying that they have received my payments, and allocated them correctly. The only thing is the estimate hasn’t changed. When I last looked, my estimated pension was £119.51 a week, based on my current contributions. It still is even though my record now shows 5 additional completed years – confused or what!

Here’s the original letter dated June


Here is the letter I received this morning


And finally the website shows exactly what it did a few weeks ago, although the screen with the years has been updated


So either they haven’t recalculated my pension, or I have wasted my money….

Another phone call on Monday morning I think. aaaaaghscreenhunter_04-nov-12-13-16

The 2 years that were not full were in 1975-77 when I was a fulltime student!. 35 years is all that is needed

Roll on Monday

Update May 2017 – I have just had a letter saying I am getting a refund of my £2600. I had so many Contracted Out payments, that when they did the sums in April 2016, any payments made by me would not change the outcome of my pension. However, if I understand it correctly, any payments made post April 2016 will work. So I am now off to research that.

The path is not easy. Fortunately for me, I have both the time and resources to do that chasing!  I feel so sorry for those women of my vintage, who do not have a workplace pension, who only have minimal savings because they were earning basic wages. The State pension used to fill the gap. No longer….


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