Qualifying for full state pension to become easier

pensionsIt will take people less time to qualify for a full state pension in the future.

As from April, the number of years for which someone must pay NICs in order to secure a full pension is to be reduced.

In the case of men, the figure falls from 44 to 30 years, while for women it falls from 39 to 30 years, if they are retiring after 5 April.

Anyone with a shortfall in their NICs can make payments to correct all or some of the deficit and to improve their state pension.

For most people, top-up payments need to be made within six years of the end of the tax year for which the contributions are being paid. But men born between April 1943 and April 1950, and women born between April 1948 and October 1952 can also top up any six years since April 1975 for a total of 12 years.

To top up a pension, someone must have a minimum 20 years of contributions and must make the appropriate level of voluntary Class 3 NIC payments for each extra year.

Anyone retiring after 5 April this year will only to complete a record of 30 years’ NICs to qualify to secure a full pension.

Anyone who has already retired, or will retire before the end of this tax year, will still need to be in a position to top up their NICs to a 44-year total for men and a 39-year total for women for the full pension.

There is, however, some extra leeway for those who retired between 6 April 1998 and 24 October 2004. Although the period falls outside of the six-year rule, they have until 5 April this year to top up extra years between April 1996 and April 2002. The dispensation is because the government did not send out reminders about making good any missed payments during that time.

People can top up or make extra NIC payments to HM Revenue and Customs (HMRC) at http://www.hmrc.gov.uk/ni/volcontr/whentop-up.htm

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