You can boost the amount you receive by filling in any gaps in your national insurance record or choosing to defer taking it.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown: “When the then Prince Charles celebrated his 65th birthday he became a “pension-heir” able to claim his state pension. Few of us are wealthy enough to be able to afford to donate our state pension to charity but if you are like the King and still working and don’t need the money straightaway, you could get more from this all-important benefit by deferring claiming it.
You do not receive your state pension automatically when you hit state pension age – you have to claim it. For every nine weeks you defer you will receive the equivalent of 1% extra. This works out as just under 5.8% for every 52 weeks. So, if you were entitled to a full new state pension which is currently around £10,600 per year, you could get an extra £614 by deferring for a year.
If you don’t need the extra money straightaway, then this could be a handy way of boosting how much you get when you actually do decide to leave work. However, you must be careful that by deferring you don’t affect your entitlement to other benefits you could receive such as Pension Credit.
The best way of making the most of your state pension is to make sure you can claim as much as you can. Under current rules you need 35 years’ worth of National Insurance credits to get a full new state pension. However, many people have gaps in their record due to time spent out of the workforce.
It is important to get a state pension forecast which will tell you how much you are on track to get and let you know if you have any gaps in your National Insurance record. If you do have gaps, then check with DWP to see if you qualified for a benefit during those periods which comes with a National Insurance credit. Examples include Child Benefit and Universal Credit. If this is the case, then you may be able to backdate a claim.
If you are unable to do this, then you have the option of plugging the gaps by buying voluntary national insurance credits. Buying a full year currently costs just over £907 – partial years will be cheaper -and for each year you buy you get an extra 1/35ths state pension – which is just over £300. This means that as long as you live at least three years after state pension age you’ve got your money back.
You can usually buy voluntary National Insurance credits for the previous six tax years but there is a current opportunity for those retiring under the new state pension system (post 2016) to fill gaps going back to 2006. This ends on July 31st.
It is really important to check with DWP whether you will benefit from buying voluntary credits as there may be cases – for instance where you are contracted out – where buying the extra credits does not boost your state pension.”
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