Your state pension – how to maximise your entitlement

Your state pension – how to maximise your entitlement

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult an independent financial adviser.

Building up your UK state pension is arguably one of the most worthwhile ways to help provide yourself with a comfortable retirement. Yet many people are not getting the most out of their state pension entitlement. Indeed, one study in November 2020 estimates that £5bn might be currently sitting in the UK Treasury, in the form of underpayments to pensioners. This draws attention to the fact that 1 year in missed national insurance contributions (NICs – which builds up your state pension) could represent £20,000 in lost income over a 20-year retirement.

Needless to say, it pays to give your state pension a good deal of thought – especially if you have another ten years or so until retirement, where there might still be time to make up a shortfall. In this article, our financial planners at Cedar House offer some ideas to help maximise your state pension entitlement.

We hope you find this content helpful, and invite you to contact our team here at Cedar House for more information or to access personalised financial advice:

020 8366 4400 or


How much state pension can I get?

The amount of yearly income on offer from the UK state pension is not insignificant. In 2020-21, the full new state pension amounts to £9,110.40 per year. This could go a long way to covering your expenses in retirement given that, at minimum, a single person may need £11,830 per year to cover essentials. For a couple to retire comfortably, however, a yearly income of £25,000 or even over £40,000 may be more realistic. 


What do I need to get the full entitlement?

Under current pension rules you need at least 10 years of qualifying NICs to get any UK state pension. To get the full new state pension you will need 35 years under your belt. If you are just starting out in your career then this should not be too daunting. After all, a 21-year-old would be 56 by the time they complete their required tally (assuming they keep up their NICs and do not take any career breaks). 

Things can get trickier the further you are into your career. If you are 55, for instance, with 20 years of NICs on your record, then you still need another 15 years of NICs to achieve full entitlement. This would take you to age 70. However, there might still be some options here which do not necessarily require working longer and delaying your retirement.


Can I claim credit for missed years?

There are many reasons why you might not pay NI in a given financial year (i.e. through PAYE). Perhaps you lose your job and cannot find new employment for a while. Maybe you choose to take time out to raise a child or look after a dependent (e.g. a disabled family member). There are also special cases such as spouses of military personnel stationed overseas, or perhaps there is a season of life where your earnings do not reach the threshold for paying NICs.

In many of these cases, you can still build up your NI record by demonstrating that, within the financial year in question, you are partaking in a “valuable activity” – providing care or looking for new employment. If you are currently looking after a disabled person for at least 20 hours per week, for example, but have not yet received NI credits then you might be able to qualify by making a claim. Similarly, those presently on sick leave and receiving SSP (statutory sick pay) can receive NI credits by approaching HMRC, provided the SSP falls under the lower earnings limit for National Insurance.


Remember voluntary contributions

In many cases people miss a year or more of qualifying NICs and cannot claim NI credits (as in the situations above). Yet often it can be worthwhile to “top up” incomplete years to get the full, qualifying year on your record. Consider the following example. Imagine that you check your NI record and discover that a one-off payment of £700 would complete the year. Looking at how many years you have left to work, you realise that the only way to achieve the required 35 years (without delaying retirement) is to make voluntary contributions. Remember, as mentioned at the beginning of this article, that one year of missed NICs could represent £20,000 lost in retirement over a 20-year period. This amount would also likely retain much of its value, given that the UK government still links the state pension to inflation. In light of this, the £700 one-off contribution can be seen as an investment which is likely to produce an enormous return in the future, and possibly make a huge difference to your quality of life in retirement.

Of course, if you are happy with the idea of delaying retirement and spending a few more years to build up your state pension entitlement further, then this can be a perfectly legitimate option. In any case, we suggest seeking professional financial advice to survey the suitable range of options for your state pension, workplace pension(s) and private pension(s).


Conclusion & invitation

Interested in discussing your retirement or wider financial plan with an experienced financial adviser? Get in touch today to discuss your financial plan with a member of our team via a free, no-commitment consultation:

020 8366 4400 or


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